Carl O. Hilgarth's Commentary on "Owning up to a Failure"
Author(s):
Carl O. Hillgarth
I
XYZ returned a failed piece of equipment to R&M
Machinery, the manufacturer. At a meeting with Archie Hunter,
the XYZ representative following the return of the failed piece
of equipment, Norm Nash represented R&M's "official
position": the piece of equipment is all right. It was during
this meeting that Walt Winters, an R&M engineer who was
intimately acquainted with the kind of equipment XYZ returned,
suspected that it was not properly tested out by R&M and
that it failed because of an internal problem.
Without data to substantiate his suspicions and since he is
not R&M's "official" representative at the meeting, Walt
could not conjecture in the presence of the customer. But, he
can suggest to both Norm and Archie that since there are two
positions regarding the returned equipment, that Norm arrange
for engineering to examine it and schedule a follow-up meeting
to present and discuss the findings. Archie will probably agree
to this. Hopefully Norm's "official position" has enough leeway
for him agree, too. After the meeting Walt should discuss his
suspicions with Norm and arrange to examine the equipment.
II
After the meeting, Walt talks to Norm about his diagnosis
suggesting R&M tell XYZ that the problem is R&M's and
that they will replace the equipment. Norm replies that he
doesn't think it wise to acknowledge the failure is R&M's
fault, hang out our wash (that our failure to properly test out
the equipment resulted in an internal failure), and lessen
XYZ's confidence in the quality of our work when "a 'good will'
gesture to replace the equipment at out own expense should
suffice." This is strange logic as it implies there was
something wrong with the equipment R&M originally
supplied.
Subsequently, R&M management decides to adjust the
problem by replacing the equipment because XYZ "have been such
a good customer all these years" but not tell them the real
nature of the problem. Again, the implication is that there was
something wrong with the equipment R&M originally
supplied.
Is R&M's fear of losing its reputation for quality and
reliability the root cause of Norm's "official position" in
representing management regardless of any fact-finding - to
protect our reputation at all costs? Or is it the converse. In
either case, why didn't management ask for engineering's
analysis? Don't they want to know what, if anything, is wrong
with the equipment? Don't they realize that engineering can
analyze equipment failures and improve quality and reliability?
Don't they recognize the value of longstanding business
relationships and the years invested in establishing them?
Aren't they aware of or concerned about what Norm Nash is
saying or doing on their behalf? And by whose authority does he
represent the company's "official position"? Are they aware
this failure could be repeated in the replacement equipment
provided to XYZ? What will Norm Nash's "official position" be
then? What will XYZ think about R&M? And, what will
R&M's equipment replacement policy be when a company who
hasn't been such a good customer all these years encounters a
problem with equipment of its manufacture?
Since R&M's business and reputation is based on
supplying sophisticated equipment and reliable repair service,
its management should be concerned enough about any product
failure. This concern should be demonstrated by the returned
goods area representative who should use engineering to examine
any returned equipment and report on its condition. Since
R&M's policy seems to be to replace defective equipment in
any event, there is nothing to lose and everything to gain by
being "straight up" with XYZ and other customers in telling
them the nature of an equipment problem. R&M also benefits
by being able to improve their equipment designs.
This episode should concern Walt because if the resolution
of this problem is not handled as a cover-up, it comes very
close. If you have a good supplier relationship as R&M does
with XYZ, why jeopardize it. You can acknowledge the failure,
and that the failure resulted from not testing the machine
properly. Engineers learn from failures. Maybe the failure
occurred because R&M did not fully understand a some aspect
of the equipment's use at XYZ.
Also in deciding to replace the equipment because XYZ has
been a such a good customer all these years borders on
hypocrisy. To XYZ, R&M is a supplier. And, XYZ can go
elsewhere with its business. In representing R&M's
"official position", Norm creates a problem that makes an
honest resolution difficult.
III
What was really an engineering problem at R&M became a
management problem because of the "official position" taken by
Norm and management's decision to see it Norm's way. They have
placed the firm's reputation with XYZ at risk. The lessons for
Walt as he moves into management are:
- The integrity of business and customer relationships must
be preserved through honest communications.
- Prepare a position description that includes the typical
duties, responsibilities, and qualifications of the returned
goods area representative.
- Institute a policy of having all equipment returned
because of a failure, unsatisfactory performance, or any
other reason examined by a team comprising the returned goods
area representative and the engineer most knowledgeable about
the equipment.
- After examining returned equipment, meet with the
customer to review the findings and present the proposed
remedy based on the findings. Thus a failure that is an
engineering problem should be handled and acknowledged as
such.
If XYZ has been such a good customer, then R&M must be a
good and honest supplier. In this case, by agreeing to replace
the equipment, R&M did not use good judgement or honestly
solve the problem.