Don’t Blame ISO for Inefficient Operations

I’ve heard executives say their small to medium-sized for-profit manufacturing or service company is not operating efficiently because of ISO bureaucracy—specifically, the ISO 9001 Quality Management System or its related standards (ISO 13485 for medical devices; AS9100 for aviation, space, and defense; etc.). These leaders, and/or their staff, often blame ISO for the company’s operating problems but I disagree. In my professional opinion, ISO is not the problem.  

While I agree that efficiency is not a primary objective of the International Organization for Standardization (ISO), the requirements of its standards do not prevent efficient operations. I believe the process-based approach required by these standards is a good baseline from which an organization can drive efficiency without negatively impacting compliance. 

Let’s take a high-level look at ISO requirements using ISO 13485:2016 as the reference document. ISO 13485:2016 has eight clauses. The first three—Scope, Normative references, and Terms and definitions—are often skipped, but they are nonetheless important. For example, Clause 1 (Scope), states in part, that “This international Standard specifies requirements for a quality management system where an organization needs to demonstrate its ability to provide medical devices and related services that consistently meet customer and applicable regulatory requirements. Such organizations can be involved in one or more stages of the life-cycle, including design and development, production, storage and distribution, installation, or servicing of a medical device and design and development or provision of associated activities (e.g., technical support).” 

Clause 1 (Scope) further specifies how to manage requirements that are not applicable due to activities undertaken by the organization or the nature of the medical device for which the quality management system is applied. 

Clause 2 (Normative references) references ISO 9000:2016, quality management systems fundamentals and vocabulary, which shows the importance of terminology. 

Clause 3 (Terms and definitions) provides key terms and definitions, reinforcing the importance of terminology.

Clause 4 (Quality management system) defines the various quality management system requirements, such as general requirements for a quality management system, requisites for the Quality Manual, and mandates for document and record control.

Clause 5 (Management responsibility) defines management requirements, such as management commitment, customer focus, quality policy, planning, responsibility mandates, authority and communication, and management review.

Clause 6 (Resource management) defines requirements for people (human resources), infrastructure, work environment, and contamination control.

Clause 7 (Product realization) covers what I consider to be operational requirements such as planning of product realization, customer-related processes, design and development, purchasing (includes supplier management), and control of product and service provisions (such as production controls, cleanliness of product, installation and servicing activities, sterilization, process validation, product identification and traceability, control of customer property, preservation of product, and control of monitoring and measuring equipment.

Clause 8 (Measurement, analysis, and improvement) defines general requirements to demonstrate conformity of the product, ensure quality management system conformity, and maintain quality management system effectiveness. This clause also contains requirements for monitoring and measurement, including feedback requirements, complaint handling, regulatory reporting, internal quality audits, monitoring and measurement of processes and product, control of nonconforming product, and corrective and preventive actions.

These requirements, in my opinion, are common sense requirements and not burdensome. Nor do they present a barrier to efficiency. 

So why blame ISO?  There are three reasons executives usually blame ISO for their company’s inefficiencies: 

• It’s easy to blame ISO—By placing blame, companies can avoid addressing underlying problems of inefficiency (many organizations claim to only follow ISO because it is a regulatory or customer requirement). 
• Lack of ISO knowledge—Quality and regulatory professionals famously claim that quality is everyone’s responsibility, but for many of those in marketing, sales, etc., quality can be a difficult concept to understand. If quality is everyone’s responsibility, why have a quality manager, director, or vice president of quality? 
• Corrective and preventive action systems that don’t work—An ISO registered/certified company with an ineffective corrective and preventive action can prompt management to feel like the standards are a waste of time.

ISO, however, may not be the sole reason for a company’s inefficiency. There can be many causes, and they can differ depending on the organization itself. Nevertheless, there are some common factors central to corporate inefficiency:  

• Cash flow—This problem mostly affects smaller companies in the growth portion of their lifecycle or those that have had their product or services peak from additional competition. Typically, cash flow issues are not discussed beyond the chief financial officer (CFO) and the executive management team but cash deficiencies are felt throughout the organization. Discontinued projects, changes of plans, or leaving positions vacant are all indicators of cash flow issues and they are detected within the company. The barriers and workload caused by insufficient cash flow coupled with employees’ reactions to these problems create a toxic environment that drives inefficiency.
• Leadership—It’s easy to blame leadership, but the buck stops at the top. Inefficient companies are not well managed, and often top management drives inefficiency by failing to adapt new technologies and methods, by focusing on non-value added activities, and through lack of vision and purpose. 
• Nepotism—Many family-owned businesses do very well throughout the organization’s lifecycle. However, familial favoritism and hiring or keeping unqualified relatives is a major contributor to inefficiency.
• Poor quality products/services—The cost of poor quality is well-established, but its impact on efficiency is often not highlighted from a non-financial point of view. The rework, the review of complaints, the reinspection of product, the retraining of people, the product recall all take resources away from creating new products or services.
• Wrong product or service—When a company’s offerings are not cost-effective or are no longer the standard of care, more time and energy is required to make a sale. 
• Too big for what the company does—Some smaller companies are too big for their product or service offering (they have too many employees). Typically, these companies fail to acquire the necessary technology.
• Too small for what the company does—Conversely, some companies are on overdrive well beyond the startup phase. Employees work long hours and multi-task, but they cannot maintain efficiency. 
• Meetings—Meetings are necessary but only when they have a clear purpose. A company culture that drives meetings without purpose will contribute to inefficiency.
• Over reporting—Communication is vital and important. Status updates are necessary.  But the effort spent in reporting progress should not mirror the effort spent on the activity. 
• Too much emphasis on design—I once worked with a company that designed an instrument tray that was almost the same as an off-the-shelf case. Sometimes when a company values its design and development abilities, it can overlook simpler alternatives.
• Lack of planning—The old saying “you don’t plan to fail; you just fail to plan” comes to mind. Planning is critical to driving efficiency.
• Unethical behavior—A lack of ethics almost always drives inefficiency as well as other problems. 

There are various ways to combat inefficiency but Lean Six Sigma is typically a good starting point since it can help reduce waste and process variation. To properly address corporate inefficiency, however, the company and specific causes of the inefficiency must be well understood. The following recommendations can help improve efficiency at companies that have fallen victim to inefficiency:

• Cash flow­—Start by cutting cost. Companies have a better chance of controlling internal costs than improving sales.
• Leadership—Leadership issues must be addressed by management. Awareness is key; you cannot fix a problem you are unaware of. Top executives should consider engaging in periodic self-evaluation, joining a group of CEOs and leaders that work together to generate awareness, or even hiring a coach.
• Nepotism—This is truly a sticky issue. Nepotism is the practice among those with power or influence of favoring relatives or friends by giving them jobs. Family-owned businesses can be falsely accused of nepotism just because they are a family business. Company owners or CEOs are responsible for eradicating nepotism, though it’s not always easy to do.
• Poor quality products/services—ISO registered/certified companies with inferior products and/or services should consider implementing Lean Six Sigma practices. If the poor quality has led to compliance issues with regulatory agencies, then a regulatory/quality professional with expertise in quality management system remediation should be recruited. 
• Wrong product or service—Companies manufacturing or selling products or services that are no longer viable must develop or acquire more practical goods and/or services.
• Too big for what the company does—I seldom suggest reorganizing or downsizing, but this is what I recommend doing in these cases. The key here is reducing overhead, consolidating functions as feasible, optimizing processes, and approaching these activities in a systematic, thoughtful manner. Another possible solution is bringing new products or services to market and using the available resources to support the design and development effort. This option may still lead to reorganizing, but not downsizing.
• Too small for what the company does—Companies that demand too much from employees should hire qualified people as soon as feasible. First, formally assess what employees are doing to identify areas were new hires would most help. Temporary workers are often a good next step. 
• Meetings—Consider changing the facility layout so it makes it easy to collaborate with team members, and invest in technology to make it easier to collaborate when team members are working from home or traveling. In addition, establish guidelines for scheduling meetings, acceptable purposes for meetings, and meeting output.

Also, consider making meetings less formal and stress collaboration.

• Over reporting—Build reporting requirements into the planning process so clear mandates are established early on and resource needs can be established.
• Too much emphasis on design—Design and development is essential to sustain a business but these efforts should not focus on reinventing the wheel. Design and development should focus on what matters most to the company.
• Lack of planning—Companies often do not plan because management does not value planning or executives have made the planning process too hard. Make planning easier but lower the requirements and expected results of planning.  Implement a Plan Do Check Act (PDCA) approach.
• Unethical behavior—Most life sciences firms highly value ethical behavior. Owners or CEOs of companies dabbling in unethical behavior must act to immediately stop the unwanted conduct by establishing a formal ethics program.  Make ethical behavior a highly valued expectation of every employee. 

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James A. “Jim” Dunning’s consulting career began in 2001. He has provided quality and regulatory consulting services for various companies ranging from Fortune 500 medical device firms to startups. Dunning’s passion, however, lies with startups and small companies, especially those in regulatory distress. He has amassed significant experience in preparing 510(k) applications, developing complete Quality Management Systems, providing Quality System Training, and advising on quality, business, and leadership issues. Dunning is a senior member of the American Society for Quality (ASQ) and a member of the Regulatory Affairs Professional Society (RAPS). He can be reached at [email protected].