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Quality Vs. Cost Is The Real Divide In The Industry

The recent confrontation between those opposed to the value-based changes that have occurred in the marketplace and those supporting them have deep philosophical and psychological underpinnings that have been written about for ages. In fact, our grandchildren will likely still be debating the questions of: change vs. status quo, competition vs. protectionism, capitalism vs. socialism, government involvement vs. the free market, etc.

But a contributing factor to this divide is the cost vs. quality mentality. We have been told for decades about the need to be low-cost producers and increasing production efficiency. This is sound advice, to be sure. In addition, the need to improve the value of the product we are producing to enhance consumer value is also sound advice. While these two concepts were never meant to be exclusive of each other, that's exactly what they've became.

The great failure of a commodity business is its emphasis on incrementalism. We have become very good at making incremental improvements in reducing costs, increasing production, increasing efficiency and, in some cases, improving quality, uniformity and consistency, as well.

However, if one focuses too strongly on the cost side of the equation, an inevitable consequence is incremental degradation of the product. That is, one takes short cuts to achieve lower costs. This, too, is a sound business practice if one is selling into a commodity and undifferentiated marketplace, where the anonymity of the system allows you to avoid the penalties for not keeping up from a quality standpoint and reap the rewards from a cost standpoint.

When one looks at these arguments from this conflict of cost vs. quality, many of the seemingly contradictory positions being taken by the various groups make sense. A cost focus will be supportive of protectionists, and of a commodity system that doesn't differentiate the product, or at least not on a very wide basis, while seeking government involvement to underpin this lack of accountability.

On the other hand, a quality mindset will embrace differentiation, and the marketplace's ability to differentiate. A quality mindset allows the marketplace to dictate the winners and losers, but will be supportive of government intervention in areas that affect the marketplace's ability to function. This includes areas such as food safety, animal health and opening markets.

That's why these divides haven't fit perfectly among the conservative vs. liberal world viewpoints that we have become so accustomed to using in the political realm.