Monday, March 2, 2009

Better is Better

If we hope for an economic recovery, we have to be guided by an insistence on quality. Given the range of crises facing us, we are going to need a simple, clear conceptual focus to guide our recovery. To reverse our downward trend, we need to identify another trend that will take us up. One of the things that has always been part of the American success story is quality. From Valley Forge to blue jeans to Google, when we have focused on quality, in people and products, we have succeeded.

Medical studies found that when physicians were rewarded for quality of performance instead of quantity of procedures (the current Medicaid model), costs actually declined 20%.

It is possible none of the approaches to rescuing the banks will work if quality is not the primary factor in choosing which banks deserve a bailout. If a bank has been managed badly, it will not turn around under the same management. If a bank is basically well run and trusted, it should receive taxpayer support. Quality must guide these decisions.

Employers who invest in technological innovation to keep productivity high, and keep wages high as well, guarantee quality products and performance. They remain competitive while companies that seek gain through lower labor costs fail.

Info Tech and Innovation Foundation has shown the competitiveness of our economy has fallen over the past ten years. This is largely due to a focus on cutting pay rather than improving productivity and innovation. Stock prices go up when layoffs and pay cuts are announced, despite the long-term effect on competitiveness and quality. This inflates the price of the stock but does not improve quality or add value to the company. When reality returns, the balloon pops and people lose their jobs and savings.

As the indicators continue to point to a deepening crisis, we need to look deeper for answers. Rather than focus on the crisis- and solution-of-the-moment presented by various media, we need to find a guiding theme to guide our efforts. Insistence on quality is the theme.

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