The Golden Rule in Business?

Treat others as you would like to be treated. That may be the Golden Rule in Sunday School but it’s rarely passed the lips of a business executive. Too often, the business world is one of cutthroat competition, doing anything to get an edge, being obsessive about your secrets, and winning while others are losing.

Zappos takes a different approach. The online shoe company has grown from startup to $1 billion in annual gross merchandise sales in ten years. It’s doing something right. I’ve written about Zappos before in “Zappos and a Sustainable Culture,” which looked at how Zappos developed a culture that gives it a competitive advantage, and its amazing return policy in “Do You Trust Your Customers?” It turns out the company takes a fresh approach to supply chain management, too.

In “A Lesson from Zappos: Follow the Golden Rule,” Tony Hsieh, who was hired when the company started to lead its merchandising team and is now its CEO, talks about Zappos decision to create alliances with its vendors in which “partners aligned themselves to the same vision and committed to accountability, knowing we’d all benefit from achieving our goals.” (HBR, June 4, 2010) Zappos acted on this decision with processes that are open and collaborative, including:

• Returning vendor calls the same day and responding to vendor email within a few hours.
• Greeting vendors to its Las Vegas offices at the airport by a Zappos shuttle
• Giving first-time visitors a tour of the office
• Creating an “extranet” the gives vendors complete visibility to Zappos’ business: inventory levels,…

Ask What, Not Who

Several years ago I did a Baldrige assessment for a well-known service company. It was quickly apparent that a siege mentality permeated its offices with leadership blaming the production facility for problems and production blaming leadership and everybody blaming the customers, who generally disliked the company. When I presented my evaluation of the company’s management system, I told leaders they had a “culture of blameology.”

The most common question in response to any problem was, “Whose fault is it?” As a result, people kept their heads down. Nobody took initiative. Everybody avoided responsibility. Unhappy and unmotivated employees spent more time looking over their shoulders than focusing on what was in front of them.

So the first task was to change the question. Instead of asking whose fault a problem was, the more effective question is, “What’s the process?” W. Edwards Deming and Joseph Juran liked to point out that 80 to 90 to 95 percent of an organization’s problems are problems with the system, not with the people working in the system, so if you really have to blame someone, blame the people responsible for the system. Blame leadership. That won’t solve the problems but at least you’ll be holding the right people accountable.

You solve problems by understanding and improving the processes that produce them. This is a process issue, not a people issue. As someone once said, if you put a good performer up against a bad system, the system will win every time.

The Baldrige Criteria ask questions that reveal a…

Building a Company on Baldrige

Baldrige stories turn up in unlikely places, like the article, “Striving for quality has real payoffs,” on Computerworld (April 20, 2010). Al Kuebler describes his experiences getting hired as the CIO for a start-up business that was organized, built, and operated according to the Baldrige model.

During his job interview, Kuebler learned that efficient IT service delivery would be required, but that the most important measure of IT performance would be ensuring that every business function had the information it needed to make better, faster decisions for the customer.

Kuebler started his work on this issue where he needed to start: with his customers. His IT team met with each business component to establish their business needs. They then “created a diagram of the overall flow of essential information for the entire business and each component within it.” They verified their diagram with each business unit before presenting it to senior management.

This dialogue was enlightening. “I knew precisely, for the first time in my career, how the business made its profit and in what ways the IT function’s performance was a factor in generating client satisfaction, growth, and profitability,” wrote Kuebler.

The company Kuebler helped launch was AT&T Universal Card Services, which won the Baldrige Award in 1992. To my knowledge, it’s the only organization that was built from the start on the Baldrige model and that went on to win the Award. If I remember correctly, it received the Award just three years after the company was formed. A few years later, a…

Find Your Bright Spots

I’ve been reading Switch: How to Change Things When Change Is Hard by Chip and Dan Heath. It’s well-researched, well-written, and thought-provoking, and I highly recommend it.

One of the brothers’ recommendations is to pursue the bright spots in your organization. In an interview in McKinsey Quarterly (March 2010), Chip Heath says, “The principle of bright spots is that you shouldn’t try to be more like Apple; you should try to be more like yourself at your best moments.” As the Heaths write in their book, figure out “what’s working and how can we do more of it.”

The Baldrige Criteria address this by asking how you manage organizational knowledge to accomplish the rapid identification, sharing, and implementation of best practices. To many organizations, identifying best practices means benchmarking. Chip Heath is not a big fan of benchmarking. In the interview, he says, “If you believe that organizations differ in their cultures, capabilities, and structures, there’s something fundamentally odd about saying that you want to be more like another company that has a very different culture, structure, and set of capabilities.”

While most formal benchmarking processes try to address these differences, a lot of time can be wasted trying to fit someone else’s best practice to the way your organization operates. Your own bright spots should be easier to replicate because you already know they work in your culture and structure. The Heaths offer suggestions on how to recognize and understand your bright spots in their book.

Part of the problem is that we seek problems.…