If you're going to compete, know the issues.

• Author: Groves, Ray J.
• Position: Special Global Report

It's not news that today businesses face major challenges globally, with the changes in Eastern Europe, Germany, the Middle East, the "1992" countries, Mexico, and Hong Kong by 1997. Our businesses must change faster and more effectively as competition grows more intense. I believe that companies that excel in three areas will be the most influential: improving quality, keeping pace with technology, and mastering international accounting standards.

First: Quality:

At Ernst & Young, we're getting a unique view of how quality is managed in Germany, Japan, and the U.S. by cosponsoring a project with the American Quality Foundation. The product will be the International Quality Study, which looks at the automotive, health care, computer, and banking and financial services industries in the three countries. While the study isn't complete, we've already learned some important lessons:

Quality is not static. It's not built into the product. Quality processes must permeate the way organizations do business. The planning processes used by leading Japanese companies ask for greater involvement of people at much deeper levels of the organization than do ours. For example, top management at a Japanese firm may set a specific objective, such as achieving a 10-percent increase in sales, but lower-level employees construct the plan for reaching that goal and then communicate it to top management.

A nation's culture influences its quality management practices. Germany, for instance, has a guild system that plays a critical role in "professionalizing" the skills of lower-level employees. in the automotive sector, the guild dictates such practices as the selection and training of machinists. El Successful U.S. companies integrate quality into their organization-wide planning and reward systems, into the way they administer their business, making it the responsibility of all departments.

A 1990 American Society for Quality Control and Gallup survey found that more than one-third of the employees in companies with quality improvement programs do not participate. Most of them, we suspect, are in the administrative, marketing, and business management functions.

Companies at the forefront of global markets have an aggressive approach to product and service development. They apply benchmarking with greater vigor. They compare themselves to the best of the best. And they often benchmark themselves against organizations outside their particular industries.

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