In the wake of the last “Great Recession” in the 1980s (though we didn’t call it that back then), America was in economic trouble. The country suffered a two-phase recession in 1980-82 – one that left unemployment high and interest rates even higher (recall credit cards and mortgages well beyond 20%!). The economic challenges were caused by a fragile banking and savings & loan system, but one of the other root causes that’s not as frequently discussed is quite simple and fundamental: America had stopped focusing on the customer and had stopped paying attention to quality.
Setting the Context: The History of Baldrige-Based Performance Excellence
To give you just a little context, post-World War II America was productive and economically vibrant. To rebuild infrastructure left dormant during the war – and to begin to create more modern luxuries like televisions, automobiles, appliances – manufacturing produced at nearly full capacity. As a result, except for a few minor blips, the US enjoyed one of its longest periods of economic expansion from 1950-75. So much so, I would argue, that there was little incentive for US manufacturers to pay much attention to product quality or to the needs of the customer. Businesses would just keep making stuff, and people would keep buying the stuff.
But the often-untold story-behind-the-story was this: a gentleman by the name of W. Edwards Deming, often credited for creating the modern quality movement, was imploring US manufacturers to use his principles to improve processes, improve product quality, and focus on the worker and the customer. He could see the waste in most American enterprises, but he couldn’t get their attention to address it. When the perception was “it ain’t broke,” there was no incentive to fix it.
So he went to Japan in the early 50s, espousing the principles of quality and the rest, as they say, is history. Japanese products, processes, and companies quietly, but significantly, improved in the 50s and 60s, creating what would be a competitive force to the US in the 70s and 80s. Companies like Toyota, Datsun (now Nissan), Sony, and others flourished and started taking market share from American companies, who had become complacent and possibly a bit arrogant.
When those forces collided – a major US economic correction in the late 70s and early 80s, coupled with the rise of post-war Japan – public and private sector US leaders realized that businesses needed to operate in a different way to stay competitive in an emerging world market. The now-seminal NBC television episode “If Japan Can, Why Can’t We?” – which aired on the series “NBC White Paper” in the early 80s – is now credited in part for creating the US Quality Movement. The show outlined many of the principles that Japanese manufacturers used to optimize resources, engage workers, focus on customers, and drive quality – principles that Deming had taught Japan some 30 years earlier. America was playing catchup and needed to galvanize US manufacturers to improve performance or risk becoming the #2 economy to Japan.
In 1987, US Congress approved and President Reagan signed legislation to create the Malcolm Baldrige National Quality Award, named after the Secretary of Commerce Malcolm (Mac) Baldrige (who suffered an untimely death by falling off a horse in a rodeo accident during his term in office). The program was to be managed by the Department of Commerce, specifically the National Bureau of Standards (now called the National Institute of Standards and Technology – or NIST), where it still resides today. The legislation created an Award program to recognize those organizations that have demonstrated superior quality and other performance results (such as financial, customer-related, workforce-related, and leadership). But, more importantly, the Baldrige Program attempts to shine a light on best practices that advance the principles of excellence and that have been proven to improve organizational results.
Baldrige: It’s More than a Trophy
Today, the Baldrige Framework has become the de facto definition of performance excellence not only in the US, but throughout the world: nearly 100 countries have similar frameworks and award programs based on Baldrige. Also today, the Baldrige Framework is being used by thousands of organizations across the country. These organizations come from all sectors: manufacturing, service businesses, healthcare systems and hospitals, educational institutions (both K-12 and higher education), nonprofits of all types, and governmental agencies. Why? Because the principles of quality not only work in making widgets, but have been proven to work in every type of organization. And the principles of quality have proven scalable, thriving in the large, complex multinational businesses to the small mom-and-pop shops and rural school districts, and everything in between.
Today, the Baldrige Framework has become a management system, which helps leaders better understand how their enterprise is working – of what processes might be considered strengths that need to be maintained or leveraged, and what might be considered opportunities for improvement. In other words, Baldrige has become a diagnostic system to help leaders identify strengths and improvement opportunities, so that they focus their precious resources on improving the “right things” that create the most value for customers, workers, shareholders, and other stakeholders. In many ways, Baldrige can be viewed as “the annual physical for your organization” – it provides an opportunity to check the organization’s pulse and to systematically improve those things that matter the most to organizational health.
The Baldrige Framework has seven “Categories,” six of which represent a collection of processes, and the seventh that represents outcomes that an organization is trying to achieve. Under Categories 1-6, sit a collection of about 270 high-level, open-ended, non-prescriptive questions that each imply a process.
Some of the questions include:
- How do senior leaders communicate with and engage the entire workforce and key customers?
- How does your strategy development process stimulate and incorporate innovation?
- How do you build and manage customer relationships?
- How do you determine key drivers of workforce engagement?
- How does your day-to-day operation of work processes ensure that they meet key process requirements?
For each question, organizations should have a systematic approach (a well-ordered, repeatable, data-based process), that’s widely deployed (across organizational locations, units/departments, shifts, and so forth), that’s systematically evaluated and improved (the closed-loop refinement cycle that ensures processes are kept current with organizational needs), and that are aligned – and in some cases, integrated – with other organizational processes.
The Baldrige questions (called the Criteria for Performance Excellence) change every couple of years by studying and understanding what high performing organizations are doing to achieve superior results, vetting those practices, and then including them in future versions of the Criteria. In this way, the Baldrige Framework has become what’s now called the “leading edge of validated management practice.” It is truly a set of best practices against which any organization can gauge their performance, identify gaps, optimize resources, and rapidly improve – and sustain – outcomes. This makes the Framework powerful: it’s not theory or someone’s set of brainstormed good ideas, but rather an evidence-based system that includes processes and management principles that have been proven to truly drive outcomes.
Using Baldrige as an Improvement System
But here’s the deal: Baldrige is intentionally non-prescriptive: it doesn’t tell leaders how to manage their enterprises. That’s probably appropriate, as no two organizations are alike – organizations operate in different environments (even in the same industry); they are pursuing different strategies; they have different core competencies; and they are addressing different strategic challenges. As an example of the non-prescriptive nature of the Framework, Baldrige does not declare that you must use Lean or Six Sigma to achieve superior operational results. You may, of course, because those are valuable tools, but you don’t have to – there are other appropriate tools that help organizations achieve superior operational outcomes.
So how does Baldrige work? Typically, organizations that find the most value from the Framework will assess their system against the Criteria for Performance Excellence. If the Criteria truly represent a set of best practices that the highest performing organizations are using to achieve excellence, then the Framework becomes a yardstick against which any organization can gauge their own performance.
PEN (which is one of 33 state/regional programs that drive excellence using Baldrige and other methods) has a set of assessment processes to help organizations do just that – from the comprehensive, robust Performance Excellence Award process (which is very similar to the Baldrige National Quality Award) to a Consultative Assessment (that leverages consultant expertise to facilitate learning and the identification of improvement opportunities with an organization’s senior leaders) to a simple Self-Assessment (that uses a 40-question on-line “Baldrige Express” survey to determine strengths and improvement opportunities through the lens of an organization’s employees). All three assessments are intended to help organizations identify and prioritize improvement opportunities, against which they can apply resources in an effort to improve “the right things.” There is also an award that comes with the first assessment process, but it’s not about the trophy so much as it’s about accelerating improvement, optimizing resources, engaging the workforce, and achieving and sustaining better outcomes. More information on PEN’s assessment processes is here.
Last month, PEN hosted a panel discussion of four senior leaders, each representing an organization using Baldrige as their management/improvement system: Benedictine Health System, Du Fresne Manufacturing, LifeSource (the region’s nonprofit organ/tissue procurement organization), and the Minnesota Pollution Control Agency. The four organizations represent nearly all sectors (manufacturing, healthcare, nonprofit, and public sector), range in size from 80 to 7000 employees, and characterize all levels of experience and maturity in using Baldrige (from one year in using the Framework to over 12). But they shared a common perspective – they all believe that excellence is achieved through the deliberate and sustained use of a proven framework like Baldrige.
Some of the incredible insights from this panel include:
- “With Baldrige, there is elegance in simplicity: it makes the complex easier to see,” Jeri Reinhardt, VP of Quality and Performance Excellence, Benedictine Health System.
- “During the Great Recession, Baldrige saved my business,” Bob Du Fresne, CEO/owner, Du Fresne Manufacturing.
- “Baldrige helps you get better, faster,” Peter Farstad, Chief Administrative Officer, LifeSource.
- “Baldrige helps us compare against the best organizations in the world,” Cathy Moeger, Director, Operations Division, Minnesota Pollution Control Agency.
- “Baldrige helps you balance the tyranny of the urgent with what’s truly important.” – Reinhardt
- “Baldrige is our agency’s ‘operating manual’ – our playbook of how we learn and improve outcomes.” – Moeger
- “Baldrige facilitates learning across sectors and industries.” – Farstad
- “Sometimes you need to STOP doing things and START learning and improving processes.” – Moeger
- “Baldrige gives my team a common language and framework to make improvements.” – Du Fresne
- “Baldrige demands focus.” – Farstad
- “Baldrige is developmental – it meets the organization where it is in terms of maturity.” – Reinhardt
- “Baldrige transformed my business – we’re totally focused on employee engagement to lead to customer engagement.” – Du Fresne
- “When striving for true performance excellence, senior leaders need humility.” – Farstad
- “Baldrige helps us identify and prioritize improvement opportunities. It’s the best way to get better.” – Moeger
- “To get started on the journey to excellence, just get started.” – Reinhardt
To download and purchase a video copy of this valuable and energizing one-hour panel discussion, visit here. PEN members $20, non-members $40.
Summary: The Path to True Performance Excellence
The need to improve your organization’s performance has perhaps never been greater. Today, customers expect more, competent workers are growing scarce, competition is intensifying, technology and information are accelerating, and business models are changing at increasing speeds. But, with the complexity of today’s organizations, making random improvements is no longer enough. Organizations need a system – they need a way to better understand how processes are currently working and a systematic pathway to make change and to create new value for customers. The Baldrige Framework provides an excellent lens through which to diagnose and set priorities for improvement – a proven roadmap to transform an organization’s culture to focus on customers, engage workers, improve leadership effectiveness, optimize resources, and achieve – and sustain – better results. Making that change may be more important today than ever. As Deming once said: “It is not necessary to change. Survival is not mandatory.”
To learn best practices in continuous improvement and organizational excellence from 31 local, regional, and national speakers – including how some are using Baldrige as their management/improvement system – visit the region’s largest, most powerful conference on performance excellence: PENworks 2017, April 24-25 in the Twin Cities. More information is here. You will gain insights that will inspire change and facilitate better outcomes in your organization and in your career!
By the way, this article appeared in a book released just last month: Creating a Customer-Centered Culture: Leadership in Quality, Innovation, and Speed, by PEN’s partner Robin Lawton. It’s a terrific read – pick it up on Amazon today!
What other insights/tips do you have on performance excellence? Participate in a discussion on this topic: visit our LinkedIn group to post a comment.
Never stop improving!
Brian S. Lassiter
President, Performance Excellence Network
Catalyst for Success Since 1987!
Photo credits rei.com, hmapr.com, baldrigepe.org/NIST