How Not to Fail at ISO9001: What is Failure?

Posted on Dec 2, 2022, Modified : Nov 23, 2022 jshell55

The question comes up, as it applies to ISO9001, what is failure?

If it is in everyone’s interest that you succeed, and you get your piece of paper that says you are ISO certified, it means you didn’t fail, right?

Well, I am going to give you an opinion, based on 500 ISO audits, based on an extensive background in industrial operations, and over 1 million page views as a business analyst blogger for a famous financial website. You can take it for what it is worth.

Here is a little classification system, invented by me.

Class F1: Superstars

Class F1: Superstars
Category	Comments
Customers	Adding new world-class customers, retaining current customers
Products/Services	New products and services being added. Products are considered first-class.
Employees	High performers staying with the company and being rewarded.
Documentation/Procedures	Highly controlled yet there are feedback mechanisms to keep the system current.
Scalable	Since procedures and methods are consistent, this is possible. “Millions and millions sold.”
Resources	Management will spend money on new processes and updating existing equipment
Adaptability	Company will adapt to changing conditions, and see new opportunities
Attitude toward ISO and the auditor	“ISO is an important tool in our ongoing process to continually improve”

Class F2: Solid, professionally run organizations

Class F2: Solid, professionally run organizations
Category	Comments
Customers	Retaining existing customers, projects underway to expand into new markets
Products/Services	Product offerings are well thought of in the industry, customers are happy.
Employees	Desirable place to work, employees are promoted from within, managers are staying.
Documentation/Procedures	Controlled and taken seriously.
Scalability	Yes, procedures are controlled enough to allow expansion while retaining consistency.
Resources	Management will spend money on new processes and updating existing equipment
Adaptability	Management will adapt to changing conditions
Attitude toward ISO and the auditor	“We learn a lot from the ISO auditor and look forward to the audit process. We act on audit findings aggressively”

Class F3: Mediocre Middle

Class F3: Mediocre Middle
Category	Comments
Customers	Existing customers are satisfied, there is “churn”
Products/Services	There are occasional customer complaints, but mainly stable
Employees	Normal employee and management turnover.
Documentation/Procedures	Not especially important. They rely a lot on hands-on training from supervisors
Scalability	Not especially, although there may be some attempts. Lack of scalability is a symptom of being in this category.
Resources	Management slow to spend money on resources even if productivity could be improved. They may not have good measurement systems.
Adaptability	Management sticks to what they know
Attitude toward ISO and the auditor	ISO is a necessary evil, “our customers are making us.” When we get a finding, we eventually deal with it.

F4: Danger Zone

Class F4: Danger Zone
Category	Comments
Customers	Long term customers are leaving
Products/Services	Major product issues and/or recalls
Employees	Lower levels significant turnover, Entrenched managers stay around, talented managers go elsewhere.
Documentation/Procedures	Ignore. Imported from somewhere else, obsolete, otherwise useless.
Scalability	Forget it. Processes are not strong enough to transplant.
Resources	Management refuses to spend money on innovation or productivity. Active effort is spent toward not changing.
Adaptability	Management commonly blindsided by external events
Attitude toward ISO and the auditor	“I just hope we get to keep our certification.” Deals with findings reluctantly. May try to argue or dispute findings.

F5: Business Disaster

Class F5: Major Disaster
Category	Comments
Customers	Customer base is shrinking or gone
Products/Services	Major product issues and/or recalls
Employees	Entrenched managers are the only ones left. Employees get disillusioned and leave. There may be cheating, stealing and ethical issues.
Documentation/Procedures	None. Do what this week’s manager tells you.
Scalability	Why would you want to?
Resources	Management refuses to spend money on innovation or productivity. No commitment to the business future.
Adaptability	Commonly blindsided by external events, blames others for problems.
Attitude toward ISO and the auditor	“ISO? What’s ISO? At what point did we sign up for that?

Keeping Out the Riff Raff

To put it perfectly bluntly, the ISO system was developed in the first place to keep out the F4 and F5 companies.

Why is this? These are the companies that are hard to do business with. They lose purchase orders. Their billing is a mess. Products are defective, and you have trouble from a customer service standpoint. Their sales people make a lot of promises and they don’t deliver. If, that is, you can contact a sales person. What is failure? To be one of these.

Your customers, especially big ones, don’t want to make investments in the F4 and F5 companies as a supplier. Bringing in a supplier, by the way, is a big investment for some organizations, and they need reliability and also they need for the supplier to outlive their founder.

Failure is not about the Certificate

So, “failure” from the standpoint of ISO9001 is not about whether or not you get your piece of paper, but it is about whether or not you’re stuck as an F4 or F5 business disaster.

Now, that’s not to say than an F4 or F5 won’t get their piece of paper. They will do so, but their lives will be miserable every year around audit time because they don’t “get it.”

The F3s are in the middle of the bell curve. The better well- organized ones can progress to F2. There is a constant tendency to slide toward F4 as systems decay. One of the benefits of establishing consistent processes and methods is to avoid this. ISO is about maintaining consistency.

New Registrations

Where do new registrations fall? Somewhere in the F3 to F4 range. A lot of these are entrepreneurial organizations or start-ups. They have products, customers, and optimism. A lot of them are going after new business. Your definition of “What is Failure” may not agree.

After a while, in the spirit of continual improvement, their systems are expected to improve, and the business get into the F1 or F2 range, and be stars or superstars. That’s what everybody wants. The F3s try to improve to become F2s.

Most high-level corporate organizations are somewhere in the F2-or high F3 range. Their famous product offerings make people happy, there might some imperfections but they acknowledge it and work to make things better. They’re more pleasant to do business with. There are very few F1s as anyone who has had to deal with the phone company or bank knows.

Scalability

I have to say something about this. Scalability is the ability to grow the business beyond its current size and shape. It is the ability to expand successfully, either at the same location or different locations. The processes and procedures are strong enough and everyone is on the same page enough that the business can grow.

The franchise outfits are built to expand. They are all about systems and procedures.

In my experience, with several hundred companies, a business needs to have fairly strong systems to get above about 15 people. It is reasonably possible for one tyrant boss to successfully boss around about 15 people in the course of a day. But, when the business tries to expand beyond about that size, and fails, it’s that the processes are not strong enough to support it.

Scalability, in essence, is the ability of the business to survive the current owners or managers. It is also the ability of a business to have value beyond the people that are currently running it i.e. the business can be sold if needed. The business has a value beyond its buildings, equipment and the inventory. It is a system that has life of its own. That’s a very attractive thing to a potential customer because the system can outlive the people.

A properly implemented ISO system can help you have that. In fact, it’s one of the main features. It helps the organization develop processes and methods and controls that are consistent, yet can adapt to new circumstances.

Rare Exceptions

Like all rules, there are exceptions to all of this. There are companies that are so dominant in their marketplace that they can dictate conditions to everybody. Possibly, companies that are so small, and focused on a unique product line, that the marketplace will give them a break for whatever reason.

There may be some other, rare exceptions.

How not to Fail at ISO9001

I am ready to say that getting your piece of paper is relatively simple. Developing a continually improving quality system, whose products and services are loved is not simple.

The mere “passing” of your ISO audit is not the same as being successful at anything. Nothing happens in isolation, as we will learn later in McCaig’s Law.