For many companies, compliance is, at best, regarded as a necessary evil, and at worst a never-ending ordeal. But studies show those who accept compliance as a quality challenge to be welcomed, rather than a bureaucratic hurdle to be overcome tend to have more commercial success in the short and long term.
What is compliance?
The aim of any kind of business regulation is to ensure specific standards are set and observed across an industry. When enacted properly they should set expectations for the good conduct of business and give more confidence to customers about the products and services they buy and consume. Compliance is the process by which companies adhere to regulations and prove they are doing so to the relevant inspecting and regulating bodies..
International quality standards such as ISO 9001 and ISO 13485, therefore, are championed and adopted by regulators across the world to help protect customers and the companies who serve them. They do this by defining, guiding and policing a uniform level of safety and quality in particular types of products that are bought, sold and consumed in their markets.
In many sectors, these standards are mandatory, meaning a company cannot legally trade in a country or region until their product and their manufacturing processes have been audited against its requirements and officially certified as compliant.
Compliance makes consumers safer
Requiring compliance in this way makes the output of certain sectors and industries demonstrably safer. For example, the products of the food and drug industries are much less likely to kill or injure us when an agreed set of standards of design, testing and production are observed and stringently enforced.
But many studies have shown answering the regulatory challenge by focusing only on compliance, rather than improving the overall quality of a company’s processes and products, can actually impede the evolution of standards.
And this matters because that evolution could mean better and cheaper products for consumers, as well as greater efficiencies and innovation opportunities for business.
Quality creates better outcomes
In 2017, KPMG noted that nearly half of all companies interviewed in a global study functioned with only a basic approach to quality processes in place. From this baseline and without an understanding of what a more holistic approach to quality management could achieve, there might be little incentive to do much else than ‘tick those boxes’ and carry on with business as usual.
On the other hand, the McKinsey study we explored in this blog a few weeks ago, showed that in every case where a company accepted the ‘quality challenge’ - the commercial and creative benefits to the business were felt almost immediately.
Where processes became subject to continual review and optimisation, where a culture of quality was embedded into an organisation, where every function of a business took responsibility for reducing risk and driving innovation, the company made fewer mistakes, reporting less wastage and greater productivity overall. And these benefits were shown to increase the more a company invested in its quality system, but always delivering greater returns than it cost to implement.
Why choose a culture of quality over a culture of compliance?
1. Move beyond ‘basic’
Companies who are focused solely on compliance might never move beyond the most basic standards required of them. Indeed, they might only ever regard compliance as necessary to continue trading and so do nothing over and beyond facilitating that.
A company focused on quality observes their regulatory obligations as part of an ongoing commitment to meeting industry standards of quality, using their successful achievement of basic standards as a springboard to inspire future innovation and increased productivity.
2. Make auditing less of a trial
A company focused on ‘compliance’ aims to simply ‘get through’ audits.
A company with a proactive focus on quality is naturally ready for audits as and when they occur. Their whole business is driven by goals and objectives to reduce complaints, to open fewer CAPAs and to reduce the likelihood of investigations by regulatory authorities.
3. Become more efficient and profitable
A company focused on compliance alone as a quality strategy might be forever caught in an expensive trap of responding to failure and correcting mistakes.
A company focused on proactive quality and in a process of continual improvement, minimises the risk of costly product failure and regulatory fines through their vigilance and innovation.
4. Focus on customer needs for greater returns
A company focused on ‘compliance’ by definition may not always be focused on their customers. Taken up with following the letter of their industry’s regulation, they may have lost sight of its intent - to create better products for customers that meet their unmet needs in the best and most efficient way possible.
A culture of quality embedded in an organisation, produces better, safer products in a more efficient way, fulfilling customer expectations more exactly. Greater customer satisfaction increases customer loyalty and, in turn, the success of your product.
5. Make better use of your resources
Deploying staff tactically to react to regulatory demands or correct problems identified in an audit, can sap morale and eat up resource.
Having a proactive and self-sustaining quality culture can keep resources free to concentrate on innovation and new product development.
6. Live with less risk
A company that focuses on compliance may only see the future as a succession of audits to secure the right approvals to keep functioning as a business. The risk is they might do this at the expense of innovation and efficiency.
In contrast, a culture of quality encourages a holistic approach to business improvements that deliver real and long term commercial growth.
Beyond merely creating a compliant product suite, a culture of quality mitigates the risk of business failure as every part of the organisation becomes focused on optimisation and excellence in delivery.