The Lean/Baldrige Connection

Like the Baldrige model, lean started in the manufacturing world but has spread to all types of organizations. Several Baldrige Award winners have implemented lean because it helps them create more value for their customers with fewer resources. Like Baldrige, lean (1) is process-oriented, focusing, in lean’s case, on the value streams that produce products and services for customers; (2) improves quality and cycle time; and, (3) provides a competitive advantage for those organizations that institutionalize it.

In “Lean Confusion” (IndustryWeek, August 18, 2010), Jill Jusko traces the growth of lean in manufacturing, noting that 90 of the 100 IndustryWeek Best Plants from 2005 to 2009 demonstrated significant or complete implementation of lean. “Those same plants reported median 30% reductions in manufacturing cycle times over the past three years, median scrap reductions of 33%, and median productivity improvements of 24%,” according to Jusko.

But lean, like Baldrige, is about far more than quality and cycle time improvements: They are transformative systems, changing the cultures of the organizations that implement them. They help shape strategy, redefine measurement, and engage employees in the process.

Jusko describes an automotive industry supplier, Autoliv, as an example of the human side of lean. Last year at its Ogden, Utah, plant, “managers received 63 implemented ideas per person.” Most suggestion systems are lucky to garner one or two ideas per person per year, and not all of those are implemented. Imagine how good your processes could become if everyone who worked on them initiated more than one improvement every week!

An organization…

What Differentiates Baldrige Award Winners (Part 3)

In the first two articles in this series, I described five of the seven characteristics of organizations with sound management systems: (1) they think process; (2) they act on data; (3) they know where they’re going; (4) they align activities; and, (5) they blur boundaries. They exemplify all 11 Baldrige core values but one stands out: They have a systems perspective, which, according to the Baldrige Criteria, “means managing your whole organization, as well as its components, to achieve success.”

They also share these final two characteristics:

6. They treat people well. That means everyone the company touches: employees, customers, suppliers, community members—everyone. The striking difference between companies that treat people as commodities and companies that treat them well was captured in the transformation of Wainwright Industries. In the early 1990s, the leaders of this small Missouri-based manufacturer of machined parts listened to a speaker describe how his company thrived because of a sincere trust and belief in people. One of Wainwright’s leaders wondered what that meant. The CEO didn’t have a good answer, and that bothered him. What would Wainwright look like if it sincerely trusted and believed in its people?

The answer changed the company. A sincere trust and belief in people became one of its core values, and that value guided its actions. Quality improved. Safety improved. Customer satisfaction improved. Gross profit jumped 62 percent in just three years. And employees rewarded the company’s trust by generating more than one implemented improvement suggestion per employee per week. Most American companies struggle…

What Differentiates Baldrige Award Winners

Part 1 of 3

Over the last twenty years working with dozens of organizations on Baldrige assessments and with five Baldrige Award winners, I’ve identified seven characteristics that differentiate organizations with sound management systems from those without. Here are the first two:

1. They think process. All work is process. The process flows through people: those who supply it on the front end, those who use those materials to produce products or services, and those customers who receive the products or services.

Companies don’t naturally think process, often because their structures prevent it. They organize around functions—finance, human resources, operations, administration, etc.—but processes, especially those processes critical to a company’s success, are not bound by functions. They are cross-functional. Mediocre companies manage their functions but not their processes. When problems occur, they blame them on departments or work units or, if their “culture of blameology” is really mature, on specific individuals. W. Edwards Deming believed that less than 4% of the problems any company faces can be attributed to individual employees. Leaders blame people when they should be blaming—and managing—the process.

2. They act on data. At Medrad, the world’s leading manufacturer of disposable medical imaging products, the mantra is: “How do we know that?” No assumptions. No best guesses. No unsupported claims. No slack for office or position. If you lack accurate, reliable, and timely data to define a problem, propose a solution, improve a process, develop a plan, serve a customer, review performance, or do any other task that depends on sound data for…

Never as Good as You Think

How would you rate your company’s performance? The first time companies conduct a Baldrige assessment, nearly everyone earns fewer than 300 of a possible 1000 points. You’re an industry stalwart? Under 300 points. You’re a profit-making machine? 300 points max. You’re a stock market darling? 300 points at best. Think you’re better than everyone else? 300 points says you’re not. More importantly, it tells you that your management system needs attention.

Don’t believe me? Take the test. Assess your management system using the Baldrige criteria. Submit your assessment for review by trained evaluators. While you’re waiting to find out how you did, start working on those weaknesses revealed while you were putting the assessment together. Because there will be weaknesses.

I’ve helped dozens of organizations conduct Baldrige assessments. Some knew they had problems and wanted to find them. Others thought they were pretty good and wanted affirmation. The first group was never disappointed.

Very few leaders have participated in a thorough evaluation of their management systems. Most wouldn’t know where to start. Fortunately, the Baldrige criteria provide both a framework and a process for such an endeavor.

The framework involves asking questions about how your company works. The questions are grouped into seven categories that cover every aspect of your management system, from how you achieve your strategic objectives to how you determine customer requirements to how you manage key processes to a whole lot more. If you’ve never asked these questions, rigorously answered them, and expertly evaluated your answers, you have no idea how…