San Jose State University Porters Strategy In Business Activities Discussion •Read HBR article –•What is Porters strategy? Draw the components and explain

San Jose State University Porters Strategy In Business Activities Discussion •Read HBR article –•What is Porters strategy? Draw the components and explain using an example Harvard Business Review Online | The House of Quality
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FEATURE
The House of Quality
Design is a team effort, but how do marketing and engineering talk to each
other?
by John R. Hauser and Don Clausing
John R. Hauser, at the Harvard Business School as a Marvin Bower fellow during the current academic year, is
professor of management science at MIT’s Sloan School of Management. He is the author, with Glen L. Urban, of
Design & Marketing of New Products (Prentice-Hall, 1980). Don Clausing is Bernard M. Gordon Adjunct Professor
of Engineering Innovation and Practice at MIT. Previously he worked for Xerox Corporation. He introduced QFD to
Ford and its supplier companies in 1984.
Digital Equipment, Hewlett-Packard, AT&T, and ITT are getting started with it. Ford
and General Motors use it—at Ford alone there are more than 50 applications. The
“house of quality,” the basic design tool of the management approach known as
quality function deployment (QFD), originated in 1972 at Mitsubishi’s Kobe shipyard
site. Toyota and its suppliers then developed it in numerous ways. The house of quality
has been used successfully by Japanese manufacturers of consumer electronics, home
appliances, clothing, integrated circuits, synthetic rubber, construction equipment, and
agricultural engines. Japanese designers use it for services like swimming schools and
retail outlets and even for planning apartment layouts.
A set of planning and communication routines, quality function deployment focuses
and coordinates skills within an organization, first to design, then to manufacture and
market goods that customers want to purchase and will continue to purchase. The
foundation of the house of quality is the belief that products should be designed to
reflect customers’ desires and tastes—so marketing people, design engineers, and
manufacturing staff must work closely together from the time a product is first
conceived.
The house of quality is a kind of conceptual map that provides the means for
interfunctional planning and communications. People with different problems and
responsibilities can thrash out design priorities while referring to patterns of evidence
on the house’s grid.
What’s So Hard About Design
David Garvin points out that there are many dimensions to what a consumer means by
quality and that it is a major challenge to design products that satisfy all of these at
once.1 Strategic quality management means more than avoiding repairs for
consumers. It means that companies learn from customer experience and reconcile
what they want with what engineers can reasonably build.
Before the industrial revolution, producers were close to their customers. Marketing,
engineering, and manufacturing were integrated—in the same individual. If a knight
wanted armor, he talked directly to the armorer, who translated the knight’s desires
into a product. The two might discuss the material—plate rather than chain armor—
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and details like fluted surfaces for greater bending strength. Then the armorer would
design the production process. For strength—who knows why?—he cooled the steel
plates in the urine of a black goat. As for a production plan, he arose with the cock’s
crow to light the forge fire so that it would be hot enough by midday.
Today’s fiefdoms are mainly inside corporations. Marketing people have their domain,
engineers theirs. Customer surveys will find their way onto designers’ desks, and R&D
plans reach manufacturing engineers. But usually, managerial functions remain
disconnected, producing a costly and demoralizing environment in which product
quality and the quality of the production process itself suffer.
Top executives are learning that the use of interfunctional teams benefits design. But if
top management could get marketing, designing, and manufacturing executives to sit
down together, what should these people talk about? How could they get their meeting
off the ground? This is where the house of quality comes in.
Consider the location of an emergency brake lever in one American sporty car. Placing
it on the left between the seat and the door solved an engineering problem. But it also
guaranteed that women in skirts could not get in and out gracefully. Even if the
system were to last a lifetime, would it satisfy customers?
In contrast, Toyota improved its rust prevention record from one of the worst in the
world to one of the best by coordinating design and production decisions to focus on
this customer concern. Using the house of quality, designers broke down “body
durability” into 53 items covering everything from climate to modes of operation. They
obtained customer evaluations and ran experiments on nearly every detail of
production, from pump operation to temperature control and coating composition.
Decisions on sheet metal details, coating materials, and baking temperatures were all
focused on those aspects of rust prevention most important to customers.
Today, with marketing techniques so much more sophisticated than ever before,
companies can measure, track, and compare customers’ perceptions of products with
remarkable accuracy; all companies have opportunities to compete on quality. And
costs certainly justify an emphasis on quality design. By looking first at customer
needs, then designing across corporate functions, manufacturers can reduce prelaunch
time and after-launch tinkering.
Exhibit I compares startup and preproduction costs at Toyota Auto Body in 1977,
before QFD, to those costs in 1984, when QFD was well under way. House of quality
meetings early on reduced costs by more than 60%. Exhibit II reinforces this evidence
by comparing the number of design changes at a Japanese auto manufacturer using
QFD with changes at a U.S. automaker. The Japanese design was essentially frozen
before the first car came off the assembly line, while the U.S. company was still
revamping months later.
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Building the House
There is nothing mysterious about the house of quality. There is nothing particularly
difficult about it either, but it does require some effort to get used to its conventions.
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Eventually one’s eye can bounce knowingly around the house as it would over a roadmap or a navigation chart. We have seen some applications that started with more
than 100 customer requirements and more than 130 engineering considerations. A
fraction of one subchart, in this case for the door of an automobile, illustrates the
house’s basic concept well. We’ve reproduced this subchart portion in the illustration
“House of Quality,” and we’ll discuss each section step-by-step.
What do customers want? The house of quality begins with the customer, whose
requirements are called customer attributes (CAs)—phrases customers use to describe
products and product characteristics (see Exhibit III). We’ve listed a few here; a
typical application would have 30 to 100 CAs. A car door is “easy to close” or “stays
open on a hill”; “doesn’t leak in rain” or allows “no (or little) road noise.” Some
Japanese companies simply place their products in public areas and encourage
potential customers to examine them, while design team members listen and note
what people say. Usually, however, more formal market research is called for, via
focus groups, in-depth qualitative interviews, and other techniques.
CAs are often grouped into bundles of attributes that represent an overall customer
concern, like “open-close” or “isolation.” The Toyota rust-prevention study used eight
levels of bundles to get from the total car down to the car body. Usually the project
team groups CAs by consensus, but some companies are experimenting with state-ofthe-art research techniques that derive groupings directly from customers’ responses
(and thus avoid arguments in team meetings).
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CAs are generally reproduced in the customers’ own words. Experienced users of the
house of quality try to preserve customers’ phrases and even clichés—knowing that
they will be translated simultaneously by product planners, design engineers,
manufacturing engineers, and salespeople. Of course, this raises the problem of
interpretation: What does a customer really mean by “quiet” or “easy”? Still,
designers’ words and inferences may correspond even less to customers’ actual views
and can therefore mislead teams into tackling problems customers consider
unimportant.
Not all customers are end users, by the way. CAs can include the demands of
regulators (“safe in a side collision”), the needs of retailers (“easy to display”), the
requirements of vendors (“satisfy assembly and service organizations”), and so forth.
Are all preferences equally important? Imagine a good door, one that is easy to close
and has power windows that operate quickly. There is a problem, however. Rapid
operation calls for a bigger motor, which makes the door heavier and, possibly, harder
to close. Sometimes a creative solution can be found that satisfies all needs. Usually,
however, designers have to trade off one benefit against another.
To bring the customer’s voice to such deliberations, house of quality measures the
relative importance to the customer of all CAs. Weightings are based on team
members’ direct experience with customers or on surveys. Some innovative
businesses are using statistical techniques that allow customers to state their
preferences with respect to existing and hypothetical products. Other companies use
“revealed preference techniques,” which judge consumer tastes by their actions as well
as by their words—an approach that is more expensive and difficult to perform but
yields more accurate answers. (Consumers say that avoiding sugar in cereals is
important, but do their actions reflect their claims?)
Weightings are displayed in the house next to each CA—usually in terms of
percentages, a complete list totaling 100% (see Exhibit IV).
Will delivering perceived needs yield a competitive advantage? Companies that want to
match or exceed their competition must first know where they stand relative to it. So
on the right side of the house, opposite the CAs, we list customer evaluations of
competitive cars matched to “our own” (see Exhibit V).
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Ideally, these evaluations are based on scientific surveys of customers. If various
customer segments evaluate products differently—luxury vs. economy car buyers, for
example—product-planning team members get assessments for each segment.
Comparison with the competition, of course, can identify opportunities for
improvement. Take our car door, for example. With respect to “stays open on a hill,”
every car is weak, so we could gain an advantage here. But if we looked at “no road
noise” for the same automobiles, we would see that we already have an advantage,
which is important to maintain.
Marketing professionals will recognize the right-hand side of Exhibit V as a “perceptual
map.” Perceptual maps based on bundles of CAs are often used to identify strategic
positioning of a product or product line. This section of the house of quality provides a
natural link from product concept to a company’s strategic vision.
How can we change the product? The marketing domain tells us what to do, the
engineering domain tells us how to do it. Now we need to describe the product in the
language of the engineer. Along the top of the house of quality, the design team lists
those engineering characteristics (ECs) that are likely to affect one or more of the
customer attributes (see Exhibit VI). The negative sign on “energy to close door”
means engineers hope to reduce the energy required. If a standard engineering
characteristic affects no CA, it may be redundant to the EC list on the house, or the
team may have missed a customer attribute. A CA unaffected by any EC, on the other
hand, presents opportunities to expand a car’s physical properties.
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Any EC may affect more than one CA. The resistance of the door seal affects three of
the four customer attributes shown in Exhibit VI—and others shown later.
Engineering characteristics should describe the product in measurable terms and
should directly affect customer perceptions. The weight of the door will be felt by the
customer and is therefore a relevant EC. By contrast, the thickness of the sheet metal
is a part characteristic that the customer is unlikely to perceive directly. It affects
customers only by influencing the weight of the door and other engineering
characteristics, like “resistance to deformation in a crash.”
In many Japanese projects, the interfunctional team begins with the CAs and
generates measurable characteristics for each, like foot-pounds of energy required to
close the door. Teams should avoid ambiguity in interpretation of ECs or hasty
justification of current quality control measurement practices. This is a time for
systematic, patient analysis of each characteristic, for brainstorming. Vagueness will
eventually yield indifference to things customers need. Characteristics that are trivial
will make the team lose sight of the overall design and stifle creativity.
How much do engineers influence customer-perceived qualities? The interfunctional
team now fills in the body of the house, the “relationship matrix,” indicating how much
each engineering characteristic affects each customer attribute. The team seeks
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consensus on these evaluations, basing them on expert engineering experience,
customer responses, and tabulated data from statistical studies or controlled
experiments.
The team uses numbers or symbols to establish the strength of these relationships
(see Exhibit VII). Any symbols will do; the idea is to choose those that work best.
Some teams use red symbols for relationships based on experiments and statistics and
pencil marks for relationships based on judgment or intuition. Others use numbers
from statistical studies. In our house, we use check marks for positive and crosses for
negative relationships.
Once the team has identified the voice of the customer and linked it to engineering
characteristics, it adds objective measures at the bottom of the house beneath the ECs
to which they pertain (see Exhibit VIII). When objective measures are known, the
team can eventually move to establish target values—ideal new measures for each EC
in a redesigned product. If the team did its homework when it first identified the ECs,
tests to measure benchmark values should be easy to complete. Engineers determine
the relevant units of measurement—foot-pounds, decibels, etc.
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Incidentally, if customer evaluations of CAs do not correspond to objective measures
of related ECs—if, for example, the door requiring the least energy to open is
perceived as “hardest to open”—then perhaps the measures are faulty or the car is
suffering from an image problem that is skewing consumer perceptions.
How does one engineering change affect other characteristics? An engineer’s change of
the gear ratio on a car window may make the window motor smaller but the window
go up more slowly. And if the engineer enlarges or strengthens the mechanism, the
door probably will be heavier, harder to open, or may be less prone to remain open on
a slope. Of course, there might be an entirely new mechanism that improves all
relevant CAs. Engineering is creative solutions and a balancing of objectives.
The house of quality’s distinctive roof matrix helps engineers specify the various
engineering features that have to be improved collaterally (see Exhibit IX). To improve
the window motor, you may have to improve the hinges, weather stripping, and a
range of other ECs.
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Sometimes one targeted feature impairs so many others that the team decides to
leave it alone. The roof matrix also facilitates necessary engineering trade-offs. The
foot-pounds of energy needed to close the door, for example, are shown in negative
relation to “door seal resistance” and “road noise reduction.” In many ways, the roof
contains the most critical information for engineers because they use it to balance the
trade-offs when addressing customer benefits.
Incidentally, we have been talking so far about the basics, but design teams often
want to ruminate on other information. In other words, they custom-build their
houses. To the column of CAs, teams may add other columns for histories of customer
complaints. To the ECs, a team may add the costs of servicing these complaints. Some
applications add data from the sales force to the CA list to represent strategic
marketing decisions. Or engineers may add a row that indicates the degree of
technical difficulty, showing in their own terms how hard or easy it is to make a
change.
Some users of the house impute relative weights to the engineering characteristics.
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They’ll establish that the energy needed to close the door is roughly twice as important
to consider as, say, “check force on 10° slope.” By comparing weighted characteristics
to actual component costs, creative design teams set priorities for improving
components. Such information is particularly important when cost cutting is a goal.
(Exhibit X includes rows for technical difficulty, imputed importance of ECs, and
estimated costs.)
There are no hard-and-fast rules. The symbols, lines, and configurations that work for
the particular team are the ones it should use.
Using the House
How does the house lead to the bottom line? There is no cookbook procedure, but the
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house helps the team to set targets, which are, in fact, entered on bottom line of the
house. For engineers it is a way to summarize basic data in usable form. For marketing
executives it represents the customer’s voice. General managers use it to discover
strategic opportunities. Indeed, the house encourages all of these groups to work
together to understand one another’s priorities and goals.
The house relieves no one of the responsibility of making tough decisions. It does…
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