September 2001
Volume 3 • Number 4

ContentsSo

From The Editor

Don’t be misled by the name of the organization that sponsors this journal.

It is true that the majority of American Society for Quality (ASQ) members are, in fact, Americans. And—at least for the time being—the proportion of SQP subscribers who reside in the United States reflects that membership profile.

But we seek to be a “world-class” journal. The roster of editorial board members and reviewers is clearly more geographically diverse than SQP’s readership. Note, too, the international range of those whose material has been published in these pages.

The United Kingdom, Sweden, Spain, Norway, the Netherlands, Japan, Italy, Ireland, India, Hungary, Germany, Denmark, Canada, and Austria have all been represented, as authors have shared their practical experiences, often in multinational corporations or collaborative international projects.

The global vision of ASQ is stated in its mission statement: “The American Society for Quality advances individual, organizational, and community excellence worldwide through learning, quality improvement, and knowledge exchange.”

One of the Society’s objectives is to be “a worldwide provider of information and learning opportunities related to quality.” This journal helps to advance that cause. The reach of our online publication is unbounded by national borders or time zones.

Not that we go it alone. We value partnerships such as those with the two sister professional societies—the Software Group of the European Organization for Quality and the Union of Japanese Scientists and Engineers—with which we collaborate on projects such as the World Congress on Software Quality.

In this increasingly interconnected, interdependent world no one can truly be an isolationist. Electronic communications, and now electronic commerce, know no geographic boundaries. The barriers we face today are instead those of uncertainty and mutual suspicion. How can a quality professional contribute to overcoming such barriers?

In my last editorial I referred to a “cost of security” model that was based on the traditional cost-of-quality model. In such a framework, the total cost for managing security is seen as the sum of the costs expended for achieving security (prevention and appraisal activities) and the costs borne when security is not achieved (failures).

A more comprehensive view may be called “costs of trust.” It is trust that forms the basis for business-to-business and business-to-consumer transactions, especially for those that are electronically mediated. It is trust that must be gained in establishing a new commercial relationship. And it is trust that can be so easily lost when one party fails to fulfill an obligation or meet an expectation.

Quality assurance is a confidence-building effort. Yet traditional quality assurance activities are seldom visible to the ultimate consumer of a product or service. (That is, unless you find that little “Inspected by No. 12” paper slip when you unwrap some new clothing.)

By contrast, e-businesses have made confidence building an integral part of marketing and of the transactions themselves. Online customers are prompted to acknowledge they are entering a “secure” Web site and are offered links to the privacy and confidentiality policies that govern their transactions. Trust is seen as a necessary, if not sufficient condition, for doing e-business.

In a cost-of-quality model the costs to control quality are planned, the activities are scheduled and budgeted. On the other hand, the costs of not controlling quality result from failures that seem to happen at the most inconvenient times and often are budget-busters.

Similarly, trust building is a deliberate set of actions, while loss of trust requires reactive measures. Planning and implementing information security, for instance, are deliberate investments. When these measures prove inadequate, an organization enters the unscripted realm of crisis response, disaster recovery, and reputation repair.

Risk analysis leads to choices about investments in trust building and trust maintenance. If one can reduce the probability of a loss-of-trust event or diminish its impact, then that is where investments should be directed.

Nor are all investments created equal. A $1000 expenditure on an off-site training class might not represent as much value as $100 worth of books or a free online seminar. The return on investment depends greatly on the appropriateness of the investment, specifically if it is a match for the environment and needs of the organization.

The cost-of-quality model proclaims that all reductions “go straight to the bottom line.” In other words, total income is viewed as a static amount and quality costs as subtractions to be minimized. Yet a costs-of-trust framework sees trust building as having its own return on investment in the form of greater income from more trusting customers.

What new insights will costs-of-trust accounting provide? Will it equip decision-makers to more wisely allocate their investments?

Trust me, I’m working on that.

sqpeditor@aol.com