In 2009, only one in five Americans was loyal to the same car brand.

In “The Manufacturer’s World Has Changed Forever” (IndustryWeek, July 14, 2010), Robert Bloom provides this contrast in customer loyalty to point out that the purchasing behavior of customers has changed, which is old news to any company that’s managed to keep its head above water the last two years, but his case study is interesting. Italy’s Fiat Auto reported a net loss of nearly two billion euros in 2002 and experts thought it would not survive. In 2008, it reported a trading profit of more than 1.1 billion euros—a three billion euro turnaround in six years.

How did Fiat Auto do it? Bloom lists several key actions:

• Terminated a failing venture with General Motors to gain full decision-making autonomy
• Eliminated an entire floor of executives to reduce costs and bureaucracy
• Cut Fiat’s product development time in half to get products to market quickly
• Reorganized and re-energized its dealer organization to assure sell-through
• Redesigned every Fiat product to create Customer Preference for the Fiat brand and products

According to Bloom, manufacturers can take several steps to compete in today’s global marketplace—and those steps coincide with Baldrige core values (in parentheses):

• Think like today’s buyer, not like yesterday’s seller (customer-driven excellence)
• Get rid of the dead wood—it will drag you to the bottom (focus on results and creating value)
• Anticipate change—it is inevitable and relentless (managing for innovation)
• Act with determination (focus on the future)
• Move with a sense of urgency (agility)
• Inspire your organization to meet your expectations and goals (valuing workforce members)
• Align your organization to consistently create Customer Preference (systems perspective)

Bloom’s list is incomplete. From a Baldrige perspective, world-class manufacturers also value visionary leadership, organizational and personal learning, management by fact, and societal responsibility. By designing, deploying, and refining all of its key processes, manufacturers can embed these core values into their companies and become, or remain, industry leaders.

To read more about Baldrige and business, click on these articles:

• Small Wonder
• The Real Heroes
• The Top Innovative Companies
• How Can You Stay on Top?
• Engaging Customers in a Digital Age
• Developing Critical Capabilities

Located in Quarryville, Pennsylvania, Stoner makes specialized cleaners, lubricants, and coatings, primarily for car care. In 2003, it became the smallest company to win the Baldrige Award.

“We first learned about Baldrige in 1991 through the local Lancaster County program,” said Rob Ecklin, Jr., Stoner’s president. “We started to familiarize ourselves with the criteria then.” Stoner became the first company in the county to win the award in 1995. A few years later it submitted its first Baldrige application.

“We like to learn, to challenge ourselves and to be challenged,” said Ecklin. “Only a small percentage of companies truly want to improve. We’re one of them. We get excited about performance excellence. This is not a sexy business. It’s not high tech. Not flashy. But we’ve been able to get extraordinary results from ordinary people.”

Stoner gets these results by expecting every employee to be a leader. It involves all employees in setting the direction for the company. It uses teams to flatten the organization and push accountability to the front lines. It reinforces accountability by giving every employee the authority to spend up to $1,000, without supervisor approval, to resolve customer questions or complaints promptly. As a result, Stoner’s retention rate for key customers is better than 98% and less than 1.5% of all customer transactions result in below expectations feedback.

Stoner offers no special benefits programs and its pay scale is slightly under the local average, but its employees earn far more than average through a program that pays 20 to 50 percent bonuses for functional team results that are linked to corporate goals. “Most people are skeptical of the program because the percentages are so large. The way they see it, the biggest drawback is giving up control and autonomy, but you have to do that for variable compensation to work,” Ecklin said.

You can’t give up control and autonomy without total confidence in the quality of your workforce. As Stoner’s general manager, Rob Marchalonis, said, “We try to hire the best, give responsibility and freedom, and share the rewards.”

To learn more about Stoner’s world-class management system, click here.

As if that wasn’t enough, BP fought efforts to change the voluntary self-regulation laws. The oil industry opposed mandates for the remote-control shutoff switch. And BP has a history of environmental and safety violations and fines including a criminal violation of the Clean Water Act on the North Slope ($20 million fine), a leaky pipeline in Alaska ($20 million fine), and the largest OSHA fine in history for failing to correct safety problems at its Texas City, Texas, refinery ($87 million). Only a company that is making obscene profits can risk ignoring environmental and safety problems that could incur multimillion-dollar penalties.

In the Leadership category of the Baldrige Criteria, these questions are asked:

• How do you consider societal well-being and benefit as part of your strategy and daily operations?

• How do you consider the well-being of environmental, social, and economic systems to which your organization does or may contribute?

Based on results, BP apparently believes that profits trump the well-being of the environmental, social, and economic systems their oil rig is about to destroy. The company would have no more chance of being considered a world-class company by Baldrige standards than would the financial institutions, like Goldman Sachs, that have shown such total disdain for their customers’ well-being.

It’s interesting to note that the U.S. Chamber of Commerce hosted a “Free Enterprise” conference today to promote deregulation. Yeah, that’s worked really well. The Chamber epitomizes all that is wrong with capitalism, preferring to put profitability above all other considerations. Despite the well-known companies that have resigned from the Chamber over the millions it is spending to oppose climate change legislation, including Apple, Exelon, and Pacific Gas and Electric, it continues to consider the well-being of environmental, social, and economic systems irrelevant unless they support the financial well-being of shareholders. The Chamber is a dinosaur that will eventually become extinct because of its untenable views. Unfortunately, it will continue to do damage until that happens.

To read more about corporate social responsibility, click on these articles:

• Do You Know Your Externalities?
• Sustainability: A Business Imperative
• How to Build a Culture of Social Responsibility
• New Guidelines for Social Responsibility
• Purpose-Inspired Growth
• Corporate Social Responsibility

Hello? I understand the whole “business-exists-to-make-a-profit-and-nothing-else-really-matters” position, but are ROA or ROE really the best ways to measure company performance? I thought the balanced scorecard came along because our obsession with financial performance wasn’t working. Apparently, a lot of folks can’t stop obsessing.

Case in point: HuffPost Business. If you visited its home page today you would find articles on Goldman Sachs, predatory lending, Hank Paulson, the Treasury Department, AIG’s bonus cutbacks, robber barons, financial crisis, financial innovation, bank bailouts, Federal Reserve, credit card blacklists, financial reform, economic oracles, Citigroup, China, more on the Federal Reserve, home sales, jobs bill, dollar vs. euro, Greece bailout, still more Federal Reserve, etc. About the only articles on the home page that weren’t about money were about health care and fast cars.

It shouldn’t be HuffPost Business; it should be HuffPost Finance. And they’re far from alone. Pick any random site that purports to tell you what’s happening in the business world and you’ll find that 90% of their articles revolve around finance. The same is true for most business magazines.

This is how the Baldrige Criteria, which define performance excellence, measures company performance:

• What are your product performance results?
• What are your customer-focused performance results?
• What are your financial and marketplace performance results?
• What are your workforce-focused performance results?
• What are your process effectiveness results?
• What are your leadership results?

Financial performance accounts for one-half of one of these items, worth 35 points—out of a thousand. Still, you would have trouble winning a Baldrige Award if you had poor financial results, but you’d have trouble if you performed poorly on any of these questions. A well-run company cannot be obsessed with financial results at the expense of these other important—some would say equally important—indicators. But what Baldrige Award winners have shown is that performing well in all of these areas stabilizes and improves their financial performance.

When Bob Galvin was chairman of Motorola (when it received one of the first Baldrige Awards), he made quality the first item on the agenda of corporate performance reviews, which were four-hour meetings held eight times a year. Quality and cycle time took up half the meetings. When the group finished discussing them, Galvin left the meeting. His message was clear: If you’re improving those factors that determine the bottom line, the bottom line will be fine.

The best way to measure company performance is with a balanced set of metrics that address those areas that are most important to current and future success. Financial performance is one of those key indicators. But it’s not the only one.

They always do, of course. No company or leader can sustain performance excellence indefinitely. There are Baldrige Award winners that have failed after they received the Award, but so what? The Baldrige Award doesn’t guarantee unending success. It simply recognizes that, in the year it was received, that organization was one of the best-run organizations in the country. Next year, who knows? It’s like winning the Super Bowl one year (not that I’d know what that’s like, living in Minnesota) and expecting to win it next year and the year after, ad infinitum.

We’re focusing on the wrong thing. Baldrige Award winners have a lot to teach us about designing, managing, and improving effective processes in all areas of a management system. They have the results that show how well those processes work. We can learn from them. There’s nothing special about them. Their leaders are no more brilliant than your leaders. They don’t have magic processes that produce flawless results faster than humanly possible. They’ve learned, adapted, innovated, and persisted. Your organization can do that, too.

Baldrige.com is committed to bringing you the information you need to build the organization you want. No hero worship here—although we do get a little giddy about an exceptional process. Our goal is to share the ideas, approaches, and best practices that can benefit all parts of your management system with the understanding that this information, like the organizations it comes from, has a shelf life.

So pull yourself away from the pedestal and get back to work on those fundamental changes that can make your organization better. That’s what the real heroes do.

To read more about how to improve your organization, click on these articles:

• 10 Steps to World Class
• 80 Critical Questions
• Baldrige Gets Results
• How to Integrate Baldrige
• Making Change Happen

The top 20 most innovative companies are: (1) Facebook; (2) Amazon; (3) Apple; (4) Google; (5) Huawei–a Chinese telecom equipment provider; (6) First Solar; (7) PG&E; (8) Novartis; (9) Walmart; (10) HP; (11) Hulu; (12) Netflix; (13) Nike; (14) Intel; (15) Spotify–a European music-streaming site; (16) BYD–a Chinese car-and-battery maker; (17) Cisco Systems; (18) IBM; (19) GE; and (20) Disney.

That’s quite a variety of companies, from the “old guard”—Intel, IBM, GE, and Disney—to the “tech titans”—Amazon, Apple, and Google—to “green” companies First Solar and BYD.

Fast Company also identified the ten most innovative companies by industry, including consumer products, retail, technology, the Web, and consumer electronics.

It’s interesting to note that two-thirds of the 50 were not on last year’s list. As the chairman of HTC, ranked second in consumer electronics, said, “What you have learned is never enough.”

To read more about innovation, click on these articles:

• 3 Systematic Innovation Processes
• Making Innovation Part of Your Culture
• Innovation in the U.S.: The Bigger Picture
• Management System Innovation
• Innovation and Quality

And then its goal changed from being first in quality to being first in global sales. A culture built on slow-and-steady, where teams were given months to find solutions and leaders spent years developing their capabilities, gave way to quicker product launches, faster plant openings, and rapidly expanding supplier networks. Customer started to grumble. Flaws appeared. Recalls tarnished a reputation that seemed indestructible.

The Baldrige Criteria ask how you create a sustainable organization. That’s not the same question as how you sustain a great organization, and based on results, you can’t, at least not indefinitely. Companies rise and fall. Some reach the top and dominate the landscape for years, even decades, but they, too, eventually lose the lead.

Why is that inevitable? The Baldrige model can help your organization achieve performance excellence and it can help you sustain it, but for how long? New owners and chief executives enforce new agendas, hungry competitors draw away customers, and markets, economies, and industries change.

So how can you stay on top? Or is it impossible?