“Haven’t there been Baldrige Award winners that have failed? Gone bankrupt?” It’s a “gotcha” question and it’s almost inevitable when I’m introducing Baldrige to a new leadership group.

The answer is, “Yes–but very few.”

The poster child for Baldrige failures is Wallace Company, a family-owned pipe and valve distributor that received the Award in 1990 and filed for Chapter 11 bankruptcy protection in January of 1992. A consultant brought in to turn the company around said, “Instead of shoring up, officials spent time leading tours through the firm and on the lecture circuit.”

I remember sitting in on a conference call in the summer of 1991 between the leaders of Zytec, a Minnesota power supply manufacturer, and the man who led Wallace’s Baldrige effort. Zytec had applied for the Baldrige Award and been notified that it would receive a site visit. Its leaders wanted to know how to prepare for it so they called Wallace.

The Wallace guy talked about how they schmoozed the Baldrige examiners. I don’t remember the litany of perks they provided but I do remember thinking I wished I had been one of those examiners. The Wallace guy took obvious pride in their approach.

When the call ended, the Zytec leaders looked at each other for a moment before the CEO said what they all were surely thinking, “Well, we’re certainly not going to do that.” They believed they should win the Award on their company’s merits and they did. And the company continues to thrive today as part of Emerson Network Power.

When I get the “gotcha” question, I tell the Wallace story but I also talk about the improvements made to the process as a result. The Baldrige program tightened its restrictions on what site visit companies can give examiners and what examiners can accept. And the Baldrige Criteria started asking about how applicants planned to sustain their high performance.

I also point out that, while Baldrige Award recipients are very good, they are far from perfect. Their feedback reports include dozens of opportunities for improvement. Most recipients seize these opportunities and strengthen their organizations.

Wallace didn’t. It remains one of the few exceptions.

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