How Pavlov Works Against Low-Cost Quality In Automotive

According to the cliché, two things rule the world: reward and punishment. Pavlov knew this 120 years ago. And nowhere is this more evident than inside the average automotive company.

The typical scenario is the up’n’coming executive who overcomes adversity and is subsequently promoted due to long hours, beg-borrowing-and-stealing resources to dig a flailing project out of an enormous hole, and negotiating a difficult launch to birth the crucial baby despite all odds. The Savior. The White Knight. He employs the 89 business cliches that help with promotion, but more importantly he emerges from firefighting with the battle scars that create clout and perceived value. Even outside of automotive we regularly see award ceremonies for those who overcome adversity, such as the National Football League’s Halas Award, the Gambaru Adversity Awards, and the Pride of Guernsey Awards. Unfortunately, there are multiple studies that demonstrate within automotive how such last second efforts result in higher cost and lower quality. Nevertheless, “inspirational” is the heralding cry.

Conversely, in the wake of the lime-lighting future-exec is the passed-over leader who long ago implemented programmatic rigor, strategies equating to fire prevention, and tactics to reduce risk and maximize quality. There are forty-plus years of lessons learned of cost-conscious, high-quality systems engineering, and despite this manager having created a functional way of working he will not only evade rewards but will be punished in form of stolen budget and resources. “My project supposedly doesn’t need those people,” a Tier1 manager recently relayed. “The <chaotic> project is a massive project and is far behind schedule. My employees have hit all of their deadlines, so obviously your project doesn’t need all of those people.” Quasi-punishment.

This lack of supporting the insightful management might seem insignificant, but in a market with significant, step-functional changes such as autonomous and electric vehicles, retaining talent has become paramount. According to George Dickson of Bonusly, “More than 50% of all organizations globally have difficulty retaining some of their most valued employee groups”, 87% see retention as ”…a critical or high priority for the next five years“ and employees who feel inadequately recognized are twice as likely to seek greener pastures. So misplacing those rewards can have even greater costs, especially since turnover during periods of significant innovation have large opportunity costs. Additionally, the promotion of Chaos Managers begets the promotions of other Chaos Managers (e.g. “this is a trait that I value”), which spreads like metaphorical wildfire until the entire organization has devalued the talent that can successfully plan and, therein, forced them to chose between career advancement and strategic planning.

And it isn’t like automotive manufacturers and suppliers have misunderstood the value of quality or planning. There literally is a list of 125 marketing quality slogans for automotive alone, and tagline classics for manufacturers ranging from “If only everything in life was as reliable as a Volkswagen“ (VW), “Quality is Job 1“ (Ford), and “Precision crafted performance“ (Honda). Ranked amongst the top ten automotive quotes of all time is Sir Henry Royce’s, “The quality is remembered long after the price is forgotten.”. Therein, manufacturers have even established contractual requirements that impose upon suppliers healthy organizational processes in order to force better product quality (e.g. Automotive SPICE, Functional Safety), but these still suffer due to the inequitable, individual punishments for managers following good practices. Firefighting is appreciated more than prevention, which is exacerbated by the exponential increase in software development since problems hide until minimally integration, if not post-launch. The defects stack-up amongst the poorly-managed anarchy, and the White Knight pulls together a calvary to clean-up the mess. Rewards and punishments.

Righting Pavlov

Some organizations have implemented rewards for employees who have strategically implemented functional ways of working upfront and, therein, avoided the downstream chaos. “The goal was to shift the company’s hero culture from the back end or ‘repair errors’ to the front end and avoid errors,” says a previous CEO at a Fortune 500’s automotive division. “This is what customers want. The previous narrative was Hollywood’s version of the hero: the person carrying the orphan out of the burning building. That sells tickets. For our business, the hero is the person that avoided the project starting on fire. As such, we [previously] created the Polaris Award (a.k.a. “North Star Award”) to recognize those that deployed Advanced Product Quality Planning (APQP) thinking and planned and executed for first time right. This is a culture shift as attention can inadvertently be overweighted to ‘Firefighters’ when recognition should be given to ‘Fire Marshalls’, those in the team that prevent an issue.”

Other Tier 1s have created stable, measurable goals that are easier to quantify. These range from On-Time To Delivery (OTTD) Awards to First-Time Quality Awards to Delivery-to-Plan Awards. These certainly create managerial transparency and avoid bias within the executive suite, but are also potential cons to predictable measurables, which usually includes people gaming the system (e.g. tracking defects outside the official system to make the total appear artificially lower).

It’s worth noting that finding organizational gems for a recognition akin to a Polaris Award isn’t easy since even the implementers don’t immediately recognize the value of strategically doing things correctly the first time. People don’t get to live reality twice and see the problems avoided by upfront execution. Because of that, the team doesn’t automatically see the issues they avoided. So management must creatively inquire, comprehend and recognize the inherent worth.

In the end, though, somehow recognizing the quiet hero that thwarts the future, unseen issues will make for a healthier organization, a happier employee and an ecstatic stockholder.