Great or Just Lucky?

We study the steps taken by high-performing organizations to understand what they do well and how we can make our organizations better. That may be our first mistake.

A provocative report by Deloitte claims that the best practices of “great companies” may be more instructive as fable than fact. In “A Random Search for Excellence,” available here, Michael E. Raynor, Mumtaz Ahmed, and Andrew D. Henderson argue that success studies such as Good to Great, Built to Last, and In Search of Excellence are just as likely to be studying lucky companies as good ones.

“It’s only too likely that whatever benefit practitioners have realized has been distressingly haphazard, the consequence of a form of placebo effect (you expect it to help, so you perceive that it does, quite independently of any true causal connection), a Hawthorne effect (the mere act of focusing on something you were neglecting improves performance regardless of what motivated the increased attention), or luck (even a broken clock is right twice a day).”

The report backs up this assertion with detailed analysis of more than 230,000 firm-year observations using a “regression algorithm to create an ROA value stripped of everything but firm-level, or management, effect.” You’ll have to read the report to understand what that means, and even then it’s a struggle.

In the end, the authors don’t suggest that you dismiss the advice offered by existing success studies but that you treat such advice more as fables than science. “Their value is not what you read in them, but what…

10 Critical Questions: Results

The Baldrige model focuses on results: You don’t transform an organization without a very good reason, and for those organizations that transform themselves through Baldrige, the reason is because it delivers results. Check out some of the results achieved by Baldrige Award recipients in the following areas:

• Financial
• Customer
• Workforce

Better yet, read Category 7 in the award application summary of any winner you choose (click here) and you will find impressive results across all six of the areas measured.

The Results Category is the only Category in the Baldrige Criteria that examines your organization’s performance and improvement—but this one Category is worth 45% of the possible points when scoring a Baldrige application because the Baldrige model focuses on results. The best way to evaluate your results is through an assessment using the Baldrige Criteria. You can find out how to do that here. If you cannot do a full assessment but want insight into how to improve your results, here are 10 critical questions to ask and answer:

What are your current levels and trends in key measures of:

1. Product performance OR student learning and improvement in student learning OR health care outcomes, health care process results, patient safety, and patients’ functional status?
2. Customer/student/patient and stakeholder satisfaction, dissatisfaction, relationship building, and engagement?
3. Financial performance?
4. Market or marketplace performance?
5. Workforce engagement and satisfaction?
6. Workforce and leader development?
7. The operational performance of your work systems and key work processes?
8. Regulatory and legal compliance and ethical behavior?
9. For each of these measures, how does your organization’s performance compare to that of your competitors and other organizations with…

Baldrige and Workforce Results

In earlier articles, we listed some of the world-class financial results and customer results achieved by Baldrige Award recipients. Another area where they excel is in engaging and satisfying their employees.

“Valuing workforce members” is a Baldrige core value defined as “committing to their engagement, satisfaction, development, and well-being.” Whatever your organization’s goals for creating a high-performing workforce, evaluating and improving your management system through regular Baldrige assessments will help you achieve them.

You can test the validity of that statement by considering the workforce-related results of organizations that have received the Baldrige Award:

• Named one of “America’s 100 Best Places to Work in Healthcare” with employee satisfaction ranked in the 97^th percentile nationally (Poudre Valley Health System)
• Increased employee engagement from 37% to 65% in four years (Cargill Corn Milling)
• Staff turnover declined from 13.5% to 7.5% in five years (Mercy Health System)
• Employee turnover declined from 7.5% in 1997 to 4.5% in 2006 (City of Coral Springs)
• Turnover rate of less than 2% and never had a layoff (PRO-TEC)
• Teachers receive approximately 300 hours of technology training per year (Jenks Public Schools)
• 0.6 workdays lost due to injury per 200,000 worker hours, compared to the Bureau of Labor Statistics average of 4.8 (DynMcDermott Petroleum Operations Company)
• All employees have career development plans; 22 former employees have been named presidents of other colleges (Richland College)
• Retention of registered nurses reached 98% (Robert Wood Johnson University Hospital Hamilton)
• 90% of employees receive leadership training (Los Alamos National Bank)
• 3,300 employees contributed 20,000 implemented ideas in 2001, saving nearly $10 million (Clarke American, which averages 76 hours…

Baldrige and Financial Performance

Leaders looking for reasons to consider integrating Baldrige should be aware that the Baldrige model focuses on results. Whatever your organization’s goals, evaluating and improving your management system through regular Baldrige assessments will help you achieve them.

You can test the validity of that statement by looking at the results of organizations that have received the Baldrige Award. In this article, let’s consider the key financial results of a sampling of Award recipients:

• Maintained steady per-bushel costs from FY2006 to FY2008 despite 50-80% increase in energy costs, 30% increase in chemical costs, and 10% increase in maintenance costs (Cargill Corn Milling)
• Per-pupil expenditures among the lowest in North Carolina while being ranked academically in the state’s top 10 school systems (Iredell-Statesville Schools)
• Average charge $2,000 lower than that of its main competitor (Poudre Valley Health System)
• Revenue per associate approximately $4 million, nearly four times the IndustryWeek 90^th percentile benchmark (PRO-TEC)
• Revenue increase from $33 million in 1989 to $847 million in 2006 (Mercy Health System)
• Increased revenue by 56% from 2001 to 2006 (Sharp HealthCare)
• Overall revenue increased from $640 million in FY2001 to over $1 billion in FY2007 (ARDEC)
• Operating margin grew from 35% in 2003 to 50% in 2006, while operating expenses remained well below those of its largest competitor (Premier)
• Sales increased 93% from 2000 to 2006, with total revenues nearly doubling (MESA Products, Inc.)
• Care-based cost management saved more than $11 million in last six years (North Mississippi Medical Center)
• Since receiving its first Baldrige Award in 1999, increased revenues 93% by 2005 (Sunny Fresh Foods)
• Gross profit percentage increased…