Archive for Tom Huizenga
Acknowledging Innovative Excellence – Premier, Inc.
Complexity is a fact of organizational life. To succeed in today’s global, competitive, uncertain environment, organizations must accept complexity. The Baldrige Criteria are complex because attaining organizational sustainability in a global economy is not simple.
Premier, Inc. is a healthcare strategic alliance entirely owned by not-for-profit hospitals and health system organizations that operate both hospitals and other kinds of care services. Premier is the second largest of the few nationwide alliances serving not-for-profits. In 2011, they saved $4.2+ billion by improving processes and efficiencies in their care delivery system, which is the equivalent to the average annual salary of 70,015 nurse practitioners.
Premier has no problem answering the Baldrige Criteria questions in section 1.2, ‘How does your organization promote and ensure ethical behavior in all interactions?’ and, ‘How do you contribute to the well-being of your environmental, social, and economic systems?’ Premier operates its corporate headquarters in a LEED certified building; and last year it recycled nearly 150,000 pounds of paper on top of two tons of computers and electronic equipment. The organization also advocates on behalf of its members for healthcare policies that address safe and less toxic practices, including the need for Di(2-ethylhexyl) phthalate (DEHP) labeling of products and more oversight of industrial chemicals with increased disclosure and promotion of safer alternatives.
Premier uses a green leaf icon to tag “environmentally preferable contracts” from contracted suppliers in its electronic catalog for members, Supply Chain Advisor. These contracts have products…
15May2012 | Tom Huizenga | 0 comments | ContinuedAcknowledging Innovative Excellence – Iredell-Statesville Schools
As a school system, Iredell-Statesville K-12 Schools (I-SS) are committed to igniting a passion for learning and are rigorously challenging all students to achieve their academic potential. Regardless of the fact that I-SS has per-pupil operations expenditures ranked among the lowest in North Carolina, the 2008 Baldrige Award winner’s average SAT scores have drastically increased in the last 10 years. They have a strategic plan to keep moving forward, realizing high student performance, and long-term student success.
I-SS isn’t succeeding by motivating faculty and staff alone, but instead have implemented a number of research-based best practices to raise achievement and close gaps. By implementing formative assessments, essential curriculum, and collaborative teams, a learning-centered atmosphere has developed. I-SS asked themselves questions such as, What do students need to know?, How will they learn it?, and What will we do if they already know it? Quarterly performance measures are generated based on “customer” requirements and satisfaction, stakeholder requirements, how services will be provided, and how I-SS will know if the services are operating efficiently and effectively. When student performance does not meet targets, the gap is addressed through the systematic use of a Plan, Do, Study, Act (PDSA) cycle to identify and implement improvements.
Iredell-Statesville Schools has a drop-out rate of 2.36%, ranking it the 7th lowest in North Carolina. However, back in 2002, before implementing the Baldrige Criteria, I-SS had a drop-out rate of 6.5%. Its overall academic ranking in the state in…
24Apr2012 | Tom Huizenga | 0 comments | ContinuedThe Economics of Customer Loyalty
This article is part of an on-going series on Customer Loyalty and Customer Satisfaction
Profitability is correlated in a positive way with customer loyalty. While we have confirmed this with empirical evidence for a variety of clients in a wide range of industries, it is interesting to consider why the relationship should exist. Exhibit 1 shown below summarizes the reasons. First, simply keeping a target customer longer means the cost of churn, or replacing lost business with new business, is reduced. While Exhibit 1 depicts a relationship with a single customer, the same principle applies to portions of large business customers. Time and again, we have seen companies managed for market share, which gain share only by incurring great churn. These companies tend to realize a lower average price and have a higher delivered cost than their competitors with lower rates of churn – even if the competitors have a lesser share of the market. Customer acquisition cost, while not ordinarily accounted for by the finance department, can be significant. Improving customer loyalty reduces the significance of this cost of poor quality.
A variety of extra “chunks” of value accrue as a customer’s loyalty level increases. These are shown in Exhibit 1: profit from referrals; profit from price premium; profit from broadened purchasing; profit from co-development of products & services and profit from reduced operating costs. In theory, the relative size of these value drivers can be…
17Apr2012 | Tom Huizenga | 0 comments | ContinuedQuality and Customer Loyalty Goals
This article is part of an on-going series on Customer Loyalty and Customer Satisfaction
Customer loyalty can be defined as a bond between a supplier and target customer, reflected by the customer’s consistently spending most or all of its entire budget on the supplier. Two important aspects of this very simple definition deserve elaboration. Retaining a customer by no means results in getting all, or even most of its budget. Managers often think they do not have a customer loyalty problem because the names on the customer list have not changed in ten years. In our experience, these same managers inevitably find their businesses would be more than twice the current size were they to win the entire budgets of their existing customers for competing products or services.
The second important aspect of the definition above is the “target customer” part. In fact, there are certain customers whose business, let alone loyalty, you do not want. The story of two general merchandise retailers is a case in point. Analysis showed that very seasoned customers of Company A, the historical market leader, (now number two in the industry) became proficient at scanning the Sunday papers for specials, and would essentially “cherry pick” the retailer of low price/low margin merchandise. While Company B, the (then) number two competitor retained customers at a lesser rate, their customers: (1) bought a desirable mix of merchandise; (2) paid twice as many visits per…
11Apr2012 | Tom Huizenga | 0 comments | ContinuedAcknowledging Innovative Excellence – 3M ESPE
The Anaheim Group recently named the 3M Dental Division (ESPE) the “Most Innovative Company” in the worldwide dental industry, for the seventh consecutive year. It is no surprise that this 1997 Baldrige Award winner is pursuing continuous excellence, as they have been striving to become the supplier of choice of dental professionals worldwide for many years. Between their outstanding product development strategies and the 81 news patents released last year alone, it is hard to ignore the innovative efforts of 3M ESPE.
The Anaheim Group’s designation of “Most Innovative Company” is based on three criteria; FDA 510(k) new product clearances for the U.S. market; United States Patent Office dental industry patents; and dental patents from the European and World International Patent Offices. The report cited 3M ESPE as, “a patent dynamo, both in the U.S. and Europe.”
“This achievement is made possible not only by 3M’s continued investment in research and development, but also our culture. Global collaboration and the sharing of ideas lead to new products. That collaboration is both expected and encouraged, it’s a part of who we are,” said Larry Lair, division vice president and general manager, 3M ESPE.
Dentists, distributors, and major suppliers are all brought in to be a part of translating the voice of the customer into real design requirements, prototypes, and reliable, quality products. Mannequins called “Fletchers” are utilized to test and evaluative products on – this, and other methods are in…
29Mar2012 | Tom Huizenga | 0 comments | ContinuedPlanning or Replanning Cross-Functional Processes
The need for effective planning, management, and improvement of cross-functional processes usually arises for multiple reasons in most organizations. These can include long cycle times, budget overruns, product failures, excessive process defects, dissatisfied customers (both internal and external), no knowledge of how to do things differently, experiencing the “cross-functional dilemma,” and lastly, a leader who sees the need for change.
Through a vast collection of knowledge and reported experiences of successful replanning efforts, some common elements of effective change strategies can be deduced. These include a desire for change, knowledge of how to plan/replan a cross functional process, understanding of the underlying cultural elements which prevent change, and understanding of the differences between sequential versus concurrent process models.
At the heart of the problem for most organizations is the phenomenon of the “Cross-Functional Dilemma.” This dilemma is characterized in the healthcare-related graphic below.
As you can see from this graphic, the dilemma stems from the organization creating a functional organization structure and processes with functional goals. In this case, the dilemma arises as management does not realize that the organization operates mainly through its cross-functional processes. Typically then, we find that there is no effective planning or planning mechanism for these critical cross-functional processes, lack of management infrastructure, or any knowledge of process performance. Sub-optimization within the organization will be the result as each department attempts to do the best for itself but the departments collectively are then…
23Feb2012 | Tom Huizenga | 0 comments | ContinuedVisionary Leadership
Your organization’s senior leaders should set customer focused directions with clear and visible values, and high expectations. In addition, today’s global business leaders need to adopt a strong understanding of the major societal forces shaping our world, as well as to know where and how to respond for the good of their organization and for society as a whole. Leaders should also ensure the creation of strategies, systems, and methods for achieving performance excellence, stimulating innovation, building knowledge and capabilities, and ensuring organizational sustainability.
In order to gain the benefit of the entire workforce, senior leaders should inspire and encourage their entire organization to participate, develop and learn, be innovative, and embrace change. An understanding of the business risks and opportunities of environmental and social trends is expected of today’s leaders, in addition to how their sector and other stakeholders are responding to them. Louis Têtu, CEO of a tech company called Coveo, explains the necessary ability of a leader to bridge the gap between current knowledge and knowledge needed to take action. In his opinion, the world is moving “180 degrees away from Henry Ford’s product-centric business model to a customer-centric one, and we start to see the immense power of being able to find the right information quickly. In a product-centric world, you could take weeks and months to research. In a customer-centric world, you only get a minute, even less if the customer on…
17Feb2012 | Tom Huizenga | 0 comments | Continued
