Why are we so Bad at Aligning the Quality Strategy?

Quality leaders and professionals are struggling to stay ahead of new requirements and guidelines reshaping the Life Science landscape. A number of requirements is enforced throughout the company’s value chain giving us a hard time keeping up. Being the final part of the value chain e.g. by approving documents the quality organization most often has to compensate for and contain previous delays. While working under constant time constraint and pressure QA easily gets caught up in everyday tasks which unfortunately does not leave much room for reflection, strategic thinking, or optimizing activities. The insufficient strategic oversight and transparency of quality costs may affect the QA image.

The consequences may be expensive for a company trying reactively to remediate compliance issues by costly projects and programs. They may suffer a fatal set-back with impact on the customer satisfaction, stakeholders, investors, company culture etc. as opposed to a company staying ahead of the game. A company on top of internal and external influence factors affecting their strategy. They manage to build an aligned strategy with a clear direction and defined stepping stones and plan for implementation of future needs and requirements.

Fatal consequences of misalignment

It is very important for employees to have a clear vision and knowledge of where the company is headed. The organization needs help and guidance of the stepping stones on the road to the vision. Otherwise each employee might invent their own dis-aligned, and perhaps conflicting quality levels expressed when working in details with the different quality tasks.

An unaligned and unclear quality strategy with no prioritization can lead to an unhealthy culture causing rivalry and dissatisfaction among staff, eventually causing a split organization suffering from decreasing efficiency, decreasing quality and in worst case scenario paralysis. If this culture continues, on top of dissatisfied or lost customers, you can add an increasing employee turnover and a damaged company image. Not at all favorable to the company profit or attractiveness to professional talent needed to change the situation.

Furthermore, a missing quality strategy may reduce the number of sponsors interested in investing in the company. The investors review the strategy and procedures to rest assure that the company has a sufficient and intelligent quality strategy in line with the prospects of the business strategy.

Hence, a quality strategy outlining a clear strategic intent and priority of quality activities in parallel to the overall business strategy and targets/KPI’s is key to success. It is evident that such a strategy cannot be set up isolated in the quality organization. It has to be a joint strategic effort of the different business units with stakeholder buy-in. Many aspects of a business and  quality strategy are interdependent and affect almost every corner of the company.

The transparency challenge of building the quality vision

One of the challenges aligning a Quality Vision and Strategy is the different interests and languages of the business units. In order for the Quality Strategy to be effective, it is key to join effort on communicating in the common language, uniting the various interests of the company and building the quality vision together. This vision is strongly correlated to the company’s business vision and technology strategy. It may seem very basic, but we have often experienced that the first conflict of interest in the organization arises around the quality vision. Apart from the overall vision statement, the words, it is hard to agree on the actual desired quality level. In this case the conflict of interest arises because it is hard to figure out the consequences of a chosen quality level, and the required investments, costs versus profit.

Maybe the conflict of interest is due to different quality beliefs in the business units or even between departments. The former paradigm believing that high quality equals high costs. The new paradigm demonstrating that an increase in quality level results in lower quality costs, not higher.

Cost of Quality in a typical pharmaceutical company is around 20-35% of the sales value (Source: PWC, see table below) corresponding to a quality level between 2 sigma and 3 sigma. Nevertheless the quality vision on the company page may state a “passion for quality” and/or “world class quality” without a defined strategix road to success.

 

Sigma Level
(Degree of variation in process)

DPMO
(Defects Per Million Opportunities)

Yield

Cost of Quality
(As percentage of Sales)

2

308,537

69.2%

25-35 %

3

66,807

93.3%

20-25 %

4

6,210

99.4%

12-18 %

5

233

99.98%

4-8%

6

3.4

99.99966%

1-3 %

Source: PriceWaterHouseCoopers, 2001, Productivity and the Economics of Regulatory Compliance in Pharmaceurical Production

 

The ICH guidelines Q8, Q9 and Q10 agreed by EU, US and Japan, also called the new paradigm and the quality system of the 21st century is in line with the Six Sigma philosophy. Jane Woodcock, FDA Director of CDER is a very visionary woman trying to initiate a paradime shift in the Pharma landscape. She recommends the industry to invest in Q8 Pharmaceutical Development, in Quality by Design (QbD), to implement a quality system that truly allows continuous improvement. Quality cannot be tested into products; quality should be build-in by design.

The foundation of an effective quality strategy is creating transparency in quality costs and drivers to establish common grounds for communication and decision making across business units. Designing a quality cost diagnostic tool will fit that purpose by identifying and monitoring quality cost parameters. These parameters will become a means to secure product compliance, process improvements, quality and efficiency while reducing costs – eventually improving profit by fact-based decisions. The quality cost tool helps monitor the trend, facilitate proactively reaction on quality costs, and hence influence the company’s profit.

If you want to read more about transparency in quality costs and building a quality cost tool, please read the blog: Fact Based and Shared Tranparency in Quality Costs

The challenge of the QA image?

It is key to listen to critical and perhaps prejudiced voices of the QA image as this may be one of the challenges to creating an aligned strategy. The perceived justification of the QA organization may be to enable the company to have a certificate, a license to operate and release products, rather than having a QA organization in the driver’s seat. A QA organization who drives the quality strategy to facilitate the new quality system of the 21st century to support and ease development and profit of the business.

In practice QA overview is often delegated to middle management. Formalized and standardized so it is in danger of becoming a compliance driven ritual with incomplete information of future needs and changes in the environment. Without use of the risk management mindset. With most importance and focus is given to the integrity of the paper trail for auditing purposes. Essentially the system and processes may become overburdened with long delays to update procedures which are in consequence worked around or may become ineffective.

In this sense the influence and power of the quality organization may suffer from a prejudiced and stereotype image of quality personnel being without business acumen, bureaucrats with far too detailed and reactive response to changes. The professional as well as personal skills of QA may not support the required changes.

Perhaps the above mentioned factors of the QA image prevents the quality organization from being represented in top management with a real impact on the business? Giving voice and vote on the impact of the total quality management concept on the business and profit of the company. The combination of being “caught” in everyday tasks, the stereotype image, and the delegated overview of QA to middle management actually becomes a self-fulfilling prophecy with regard to the image. A vicious circle.

In order for the quality organization to have true impact and efficiency to help their company navigate in the ever changing environment top management has to work strategically with the QA image and brand. New professional and personal skills are required to stay ahead of and support new requirements and guidelines reshaping the Life Science landscape.

The required QA profiles and competencies as well as solutions for reshaping the QA image is the topic of a future article.

Internal and external influence factors of the strategy

Of course, both external and internal input to the strategy has to be considered. Internal inputs to and drivers of the strategy may derive from the quality cost diagnostic tool. The tool provides the data for prioritizing and deciding necessary business and quality improvement projects for implementation. Effects of investments in quality improvement projects is immediately seen by the diagnostic tool. Return on Investment (ROI) models and other financial analyses can be constructed directly from quality cost data to justify improvement project proposals to top management.

External inputs to and drivers of the strategy may derive from the impact of a new/revised company vision and strategy, new industry business trends and/or new or revised regulatory requirements. Increasing requirements by the authorities affect the industry with heavy investment projects e.g. serilization.

The steps building the quality strategy

Most often the strategy process is a parallel top-down and bottom-up process with initial input e.g. via the Strategic Organizational Review and long term Strategic Planning Process (SPP) and/or the Quality Management Review (QMR). The QMR gives the latest and up-coming outlook of new regulatory requirements of importance to the business strategy.

In addition, the organizational review provides input required to fulfill the ambitions business strategy (Business, Technology and Organizational Design).

One way of addressing important elements of the aligned strategy is a structured approach to elements shown in all its simplicity in the below model. The model includes the angles of:

  • Business Design (Key products and competencies of the business e.g. peptide development)
  • Technology Design (The technologies applied to develop, produce, and deliver the product)
  • Organizational Design (The organizational set-up and organizational development to improve the business)

In this way, the quality requirements and impact should be assessed with regard to the adjacent areas of importance to the business strategy. In addition, valued input is coming from the quality cost diagnostic tool identifying areas in need of improvement.

The implementation plan

The quality strategy is manifested in an implementation plan breaking down the quality targets into projects. Identified potential activities are prioritized according to highest impact and ease of implementation. The projects within the different dimensions of the Balanced Score Card are given specific SMART targets and a cross-functional governance structure is set up.

Laying out the implementation plan as stepping stones, a path and structured guide for successful execution is of the quality strategy is hard and difficult – and a substantial change management process.

Revision of the aligned business and quality strategy is part of the annual organizational review and SPP process. As a result of the yearly outcome of the review the Balanced Score Card is made consisting of aligned and shared KPIs of the agreed activities and projects within e.g. the dimensions “Customers”, “Finance” “Business & Quality”, and “Organization”.

Enablers of systematic execution and follow-up on the quality strategy will be covered in my next article.

Conclusion

Once the many questions of the analysis phase have been answered to build the vision, we can communicate the quality vision and lay out the step stones of the quality strategy guiding the road to reaching the vision with success. In order for the strategy to be effective it has to be manifested in yearly business goals (Balanced Score Card), KPIs and even bonus targets in each business unit. It is important that this is not a strategy workshop taking place only in the quality management team, but is a joint, structured and aligned process throughout the management teams of the business units of the company. And QA has to consider if new competencies and changes in QA image is required to succeed as a driver of the quality system of the 21st century supporting the development and success of the company.