I previously introduced Dr. Gruccok’s “three-part approach” to the quality chain in “The War Between Quality and Quantity,” which divides a company’s entire core business value chain into three stages, namely:
 

1. From marketing and sales to design and development, primarily responsible for product quality;

2. From procurement and manufacturing to delivery, primarily responsible for delivery quality;

3. From logistics to services, primarily responsible for quality support.

The “production” process through which this product creates value from scratch bears a striking resemblance to the maternal “birth” process we are all familiar with!

The process of childbirth is naturally divided into three stages: the first is the ten-month pregnancy, the second is entering the delivery room, and the third is the postpartum confinement period.

When we discuss the topic of eugenics and healthy childbearing, our intention is clear: to have a healthy, intelligent baby. Consequently, everyone unconsciously adheres to a common-sense natural principle—the so‑called “law of eugenics”—which underscores that the nine months of pregnancy are especially crucial.
 

From this, we can discern three simple yet crucial questions.

First, we have always regarded the factory as a living organism, and we view the enterprise in the same way—also as a living entity. By contrast, Westerners tend to view a business as an inanimate money‑making machine—something lifeless. That’s why we have the notion of a “century‑old enterprise”: only living entities can endure for a hundred or even a thousand years. For them, the only concepts are success and failure; today, these have evolved into the ideas of perpetual operation and sustainable development.

Secondly, promoting healthy births and childrearing requires prevention, and prioritizing the period from conception through the first ten months of pregnancy is precisely a form of prevention. This runs counter to our conventional way of thinking, because people often focus on what is visible while overlooking what is invisible. Clearly, it is precisely the invisible that matters most.

Third, when we talk about quality and prevention, it’s akin to discussing eugenics and healthy childbearing. However, in reality, those who claim to “ensure” production quality often completely defy the natural principles of eugenics and healthy childbearing. For example, in many companies, quality‑control personnel account for 5% to 8% of the total workforce—sometimes even more. The question is: where are they all? The answer is that the vast majority of them are in the “delivery room”—the production workshop—hard at work.

For example.

At a certain company, the total number of quality personnel is nearly 400.

At the “ten-month pregnancy” site, there are no marketing or sales personnel, while the R&D team comprises roughly 200 employees.

At the postpartum care facility—where the back-end service process takes place—there are roughly four or five staff members.

So, where are most people? They’re all in the delivery room.

If we can once again consider the integration of core business processes across the end-to-end value chain and the seamless connectivity of data flows, and once more map this in our minds… Cost-impacting model “If that’s the case, you should definitely give my advice a try: go home and consult the ‘factory manager’ in your family, then apply the ‘principle of excellence’ more effectively within your own company.”

The so‑called “alignment” here carries concrete meaning and reflects real‑world circumstances. Although it is expressed quantitatively and compared from a financial perspective to assess its impact on costs, it essentially points to the current state of resource allocation in quality management and the underlying causes of the problems we face. It turns out we are following the visible causes or those arising from costs. It’s about allocating resources.

For example, the actual costs incurred break down as follows: design accounts for 5%, engineering design 3%, testing 2%, and process planning 5%, while production absorbs a substantial 85%. Perhaps precisely because these costs are tangible and readily observable, they drive the allocation of managerial resources—particularly those devoted to quality management—in an “olive‑shaped” pattern.

However, the actual impact on costs is exactly the opposite: The production stage accounts for only 5%, while design, engineering, and testing together account for as much as 90%. Of course, this does not yet include sales, strategy, and marketing; however, one can readily imagine that their impact on costs is even more staggering.

This once again confirms the validity and effectiveness of our approach—“governance of the Yangtze River must begin at its source”—particularly the zero‑defect principle of “zero inputs, zero outputs.”
 

As the Crosby Institute has repeatedly emphasized, Costs and PONC have suddenly heightened awareness of quality and of prevention. For so‑called consciousness is nothing more than the degree and level of people’s attention to certain matters. This, in turn, is why we measure quality in terms of value and monetary worth.

Only when prevention and costs converge can the spark of preventive action be ignited, making tangible steps—and the desired outcomes—possible.

Huawei: Driving System-Wide Workflow Improvements Through Contract Quality

Huawei's The sales and service system has been focusing on quality from an early stage.

More than a decade ago, after Hu Houkun, then the company’s head, came to understand the significance of “governing the Yangtze River,” he mandated that every country‑level and regional division president assume the role of chief quality officer. He also introduced a company‑specific performance‑evaluation system to place responsibility for quality management squarely on their shoulders—what I have repeatedly emphasized as the principle of “putting the driver back in the driver’s seat.”

Its intent is crystal clear: to firmly grasp the critical issue of “contract quality,” make contracts the central focus of all operations, and thereby drive improvements across the entire system’s workflow. Of course, the key lies in continuously refining quality requirements and standards throughout the process-improvement cycle and embedding them into the system.

Later, they also developed the need to assign QA personnel to the sales and service system, and subsequently began establishing a quality management organization. This was because they had already come to recognize, through practical experience, that… By refining the process and aligning it with a QA‑enabled execution team, capabilities will improve; and by effectively implementing the LTC (Lead-to-Cash) process, you can naturally ensure the delivery of high‑quality contracts. The core role of QA is to ensure high quality at every stage of the input–output process.

At the same time, we will establish a “quality traceability” and accountability mechanism to encourage everyone to relentlessly pursue high quality. We will also implement the company’s “quality audit” requirements, which not only assess whether LTC has maintained quality throughout the entire process but, more importantly, identify any issues in the execution of the audit procedures. Finally, we will appoint Chief Quality Officers at both the national and regional levels.

GT Company: A Revolution in the Delivery Room

TM Company: Allocating more resources to marketing, R&D, and supplier management.