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 you read into them,” they conclude.

One big problem with most success stories is their total reliance on financial performance to separate great from good from average or worse. The Baldrige model recognizes that world-class performance requires stellar results in several critical areas: product and service performance, customer satisfaction and loyalty, workforce satisfaction and engagement, process effectiveness, leadership—and financial outcomes.

That may mean that the best practices of Baldrige Award recipients can be treated more as science than fable—or it may not. Until someone applies the methodology outlined by Deloitte to the organizations that have won the award, we will not know with any certainty just how effective their approaches are.

To read more about Baldrige Award recipients, click on an article:

• Baldrige Gets Results
• An Achievable Mission and Vision
• How to Deploy Your Strategic Plan
• Ground Zero for Customer Service
• World-Class Employee Orientation
• What Employees Want
• Identifying Key Work Processes

• Cost savings from increased productivity and deployed innovations of $23.5 million to $27 million annually for past three years (Honeywell Federal Manufacturing & Technologies)
• Cost savings from process improvement increased from $8 million in 2005 to more than $25 million in FY2009 (Heartland Health)
• Error-free delivery rate of 99% or better from 2005 to 2008 (Cargill Corn Milling)
• In 2006, average charge $2,000 lower than that of its main competitor and $7,000 lower than the Denver metropolitan area (Poudre Valley Health System)
• Crime rate cut in half over the last ten years (City of Coral Springs)
• Achieved overall Lean/Six Sigma improvements in quality (91%), cost (70%), schedule (67%), and risk (84%) with an overall cost avoidance of $3.22 billion since 2001 (U.S. Army Armament Research, Development and Engineering Center)
• Delivered services within 3 days of customer request compared to 40 days for competitors (Boeing AS)
• Quality ratings 21% higher than closest competitor (Motorola CGISS)
• 1 error in every 3,325 transactions—and 18 seconds between placing and receiving an order compared to competitors’ 70 sec. (Pal’s Sudden Service)

To find out more about world-class performance, read:

• Baldrige and Financial Performance
• Baldrige and Customer Results
• Baldrige and Workforce Results
• 10 Critical Questions: Results

• 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 similar products, services, or programs?
10. How do these results address your organization’s important customer; product, service, program, and/or offering; market; process; and action plan performance requirements?

High-performing organizations have results in all of these areas that show current levels and trends. They have benchmarks for most of their results and they typically exceed the benchmarks in those areas important to their success. And their results demonstrate performance on the key processes described in the first six Categories of their application.

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Consider this chart.

It shows current levels of performance and a trend over a longer period of time than most organizations display. When performance shows this kind of variability, some organizations include a trend line to clarify the direction this measure is heading, although, in this case, the direction is pretty clear.

The “organization” in this chart happens to be Earth, with temperature data from the National Climatic Data Center. “Normal” is the average temperature from 1901 to 2000. In an article in the October 27, 2009, StarTribune (“Statisticians downplay the notion that the Earth is really cooling”), Seth Borenstein includes this chart as evidence of global warming.

Of course, in the interest of impartiality despite all evidence to the contrary, he quotes Don Easterbrook, a Western Washington University geology professor, who said, “I don’t argue with you that the 10-year average for the past 10 years is higher than the previous 10 years. We started the cooling trend after 1998.”

Actually, even after a warm 1998 we’ve continued to get warmer, as this chart shows.

As Deke Arndt, NOAA climate monitoring chief, said, “The last 10 years are the warmest 10-year period of the modern record.” And it’s getting warmer, not cooler, which is a valid indicator of future performance unless we act to stop the trend.

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“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 of training/employee)
• Employee satisfaction “best-in-class” (Medrad)
• 80% of employees would recommend it as good place to work (Cat Financial)

You can learn more about these and other Baldrige Award recipients’ results—and the processes that produced them—online at the Baldrige program’s Web site.

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By customers we mean the typical consumers of products and services as well as patients and families, students and parents, citizens, and any other group that an organization exists to serve. Whatever your organization’s goals for serving your customers, 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 customer-related results of organizations that have received the Baldrige Award:

• Compound annual growth rate with key customers increased 20-44% in six years (Cargill Corn Milling North America)
• Patient satisfaction scores surpassed the national top 10% (Poudre Valley Health System)
• Scored better than its competitors in all categories in successive customer surveys (PRO-TEC Coating Company)
• 84% of hospital customers would recommend to others (Mercy Health System)
• Named it the best healthcare provider in the region (Sharp HealthCare)
• 90% of businesses would recommend the city to others (City of Coral Springs)
• Retained 97% of its hospital members (Premier Inc.)
• Increased customer retention from 93% to 100% from 2000 to 2005 (MESA Products Inc.)
• Physician overall satisfaction surpassed benchmark by 8-9% (North Mississippi Medical Center)
• Almost 70% of its customers say they plan to purchase again from the dealership (Park Place Lexus)
• 100% customer satisfaction compared to the industry’s 85% benchmark (The Bama Companies)
• 70% of its top customers have been with the company for more than ten years (Texas Nameplate Company Inc.)
• Ranked in the top 10% nationally on 10 of 16 student satisfaction measures (Kenneth W. Monfort College of Business)
• Exceeded customer expectations twice as often as competitors (Cat Financial)
• 96% satisfaction rate (Clarke American)
• Won 3x more customers than lost since 2000 while retaining 98% (Stoner)
• Boosted market share 20% in four years (OMI)
• Grew market share 50% in 6 years (Clarke American)
• Market share leader (Poudre Valley Health System, PRO-TEC Coating Company, Robert Wood Johnson University Hospital Hamilton, MEDRAD, Pal’s Sudden Service, Los Alamos National Bank, and others)

You can learn more about these and other Baldrige Award recipients’ results—and the processes that produced them—online at the Baldrige program’s Web site.

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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 by 51.3% from 2000 to 2004 (Park Place Lexus)
• Sales increased 72% from 1999 to 2004 in a relatively flat industry (The Bama Companies, Inc.)
• Revenue doubled in four years (Boeing AS)
• Revenue growth of 15%/year since 1998 (Medrad)
• Sales increased 400% from 1990 to 2003 (Stoner)
• Profits up 54% while industry declined 35% (Caterpillar Financial)
• 7% return on assets from 1999 to 2002 while industry declined (Motorola CGISS)
• Net income increased by 60% in five years (Los Alamos National Bank)

You can learn more about these and other Baldrige Award recipients’ results—and the processes that produced them—online at the Baldrige program’s Web site.

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