Around 1960, SAAB in Trollhättan, Sweden, and Japan's Toyota were about the same size - both producing around 30 000 cars a year. In the following decade, the gap grew and in 2012, after years of setbacks, the journey was over for SAAB while Toyota reached the top spot in the world with 10 million cars produced. This is one image among many of the 'Japanese miracle' that has characterized the quality thinking of the Western world in recent decades. But now is a very different time. A time that requires a completely new way of leading and managing organizations.
We are talking about the fifth wave of quality - Quality 5.0.
To look forward, you need to understand history. Over a couple of centuries, the Western world went from subsistence to barter to an industrial revolution - three waves of quality that radically changed people and organizations.
New global management philosophy
After World War II, a fourth wave started in the East, driven by a national desire for revenge after a lost war. In the mid-1980s, the world marveled at how a nation like Japan could become a major global player. Japan's quality tools and continuous improvement, combined with stubborn persistence and a new global management philosophy - Total Quality Management - where the customer, not the product, was the focus and the organization was constantly evolving, were the success factors. Today the country is the world's third largest economy and one of the G7 countries. No one raises an eyebrow at the Japanese miracle anymore and the fourth wave of quality is fading away.
But a fifth is already on the way!
China sprints with its second quality plan
The fifth wave of quality, which we have chosen to call 'Quality 5.0', consists of several parts. We see a new global challenger from another country in the East - China - emerging, while at home we see changing consumer demands combined with an accelerating technology development that changes behavioral patterns. Today, it is clear that through its first quality plan 1996-2010, China has raised the quality of goods and services to Western levels.
Now China has completed work on its second quality plan 2011-2020 and is globally competitive and taking strategic ownership positions, including in Europe. And China is not the only challenger. For example, the Indian economy is competing with China to be the fastest growing major economy.
Inefficiency due to disengaged employees
The fifth wave of quality is also about global technological developments. The digitalization of services is blurring boundaries and driving new consumer behaviours that increase demands on service and relationships. But while customer demands are increasing, we see that employee engagement and satisfaction is declining. Gallup's State of Global Workplace shows that in Sweden, only 14% of all employees are actively engaged in their work - employees who should be encouraged to be innovative and changeable.
Quality 5.0 means that prevailing theories and thinking about how to successfully run businesses are being challenged on several fronts.
Current management models still taught in universities and colleges do not lead to sufficiently agile organizations and engaged employees. Today, most people in the labor market have very solid skills and follow trends and developments in their industry, the nation and the world. The inefficiencies resulting from disengaged employees are hardly quantifiable.