Customer-driven excellence means much more than reducing defects and errors, merely meeting specifications, or reducing complaints. In a recent article from the International Herald Times, Steve Lohr points to the very different models of innovation that the supernovas from Silicon Valley utilize; Google and Apple are constantly working to expand their market and, ultimately, bottom line.

A customer-driven organization striving to meet Baldrige Award requirements addresses not only the product and service characteristics that meet basic customer requirements, but also those features and characteristics that differentiate the organization from its competitors. Google is this type of a customer-driven innovator, as they are constantly developing and modifying their products and services in attempt to glean instant feedback from users. They are regularly asking for customer opinions, testing new “labs,” and attempting to simplify their products to impress the end-user. This unique formula, with its emphasis on regularly testing ideas and products with customers, amounts to applying, “the scientific method to market-opportunity identification,” says Errol B. Arkilic, Program Director at the National Science Foundation.  It is directed towards customer retention and loyalty, market share gain and growth, as well as demanding close attention to the voice of the customer.

The Apple model, on the contrary, is much more refined, intuitive, and top-down.  Lohr reports that when asked what market research went into the company’s new product designs, Steve Jobs acknowledged that there was none. “It’s not the consumer’s job to know what they want.” This is not to say that Apple isn’t open to new ideas, but rather that they just are not determined by traditional market research. Jobs was a genius when it came to product development, knowing what the customer was going to “need” before they even knew it. In 2010, Apple bought the Siri personal assistant application from the Defense Advance Research Projects Agency; an indicator that openness to outsider innovation was not beyond them. As Erik Brynjolfsson, director of the M.I.T. Center for Digital Business phrases it, “It’s a lot of data crunched in a nonlinear way in the right brain.”

Customer-driven excellence is a strategic concept, one that the Baldrige Award examiners look for when selecting the best of the best. There are many avenues of innovation that will lead to success, and a single methodology cannot be the solution to every problem. Only time will tell if Apple will transition to a more “bottom-up” approach for developing their new products that is more akin to Google’s style. Success through innovation has driven both companies straight to the top, while their contrasting tactics make their avenues all the more interesting to study.

Source: “The Yin and Yang of Corporate Innovation”

Source: Juran’s Quality Handbook, The Complete Guide to Performance Excellence, 6th Edition

Let me personally thank Steve George for all of his contributions to this website and to the Baldrige process overall. We will continue to focus the site on the same principles that Steve did, which will be to offer insights and information on the Baldrige model as an archetype for performance excellence. We will offer articles, links, and information directly related to the Baldrige categories that will be both relevant and interesting to our readers. We also will have Steve join us from time to time as a guest author.

Baldrige.com will be managed by Joseph A. De Feo, President and CEO of Juran Institute, as well as Tom Huizenga, our General Manager and Baldrige examiner. Both of us were personally managed and coached by Dr. Juran prior to joining Juran Institute. We have led extensive careers in quality management, which includes the Baldrige Award. In addition, Tom and I previously worked for a company that was selected for a site visit during the first year of the Baldrige Award.

Our belief is that the US needs the Baldrige Criteria to help assure our country remains competitive around the globe for decades to come. We will do what we can to assure that happens.

We want to assure our readers that this change will be for the positive; we will strive to provide you with only the most relevant and pertinent information to better your organization and achieve improved competitiveness and business results using with the Baldrige model.

According to a press release from the Baldrige program, the state programs will work with TAB boards across the country to help small business operators learn the Baldrige Criteria and use the Criteria to assess and improve performance.

The new effort drew praise from Terry May, president of MESA Products, a 2006 Baldrige Award recipient in the small business category. “TAB is a great resource for learning and sharing with my peers,” May said, “providing real-world, practical guidance to help me improve and grow my business. The Baldrige process, both at the state and national levels, helped me take MESA to an even higher level of performance and achieve breakthrough results. So, a partnership between local TAB boards and state Baldrige programs will be a great resource for small businesses.”

The collaboration between the Baldrige program and the Alliance is another indicator of the new relationship between the programs. Earlier this month, the Baldrige program announced new conditions that basically require organizations to earn state recognition before applying for the Baldrige Award (more here). Strengthening the relationship is an important step in maintaining the viability of the Baldrige program in the face of federal funding cuts.

It’s a well-deserved honor. CPH has 247 employees and revenues of $35 million and provides more than 8,000 products to members of the Lutheran Church-Missouri Synod. It excels at customer service, starting with 98% customer satisfaction scores, exceeding the benchmark for U.S. call centers. It’s Customer Call Center has been considered a “Center of Excellence” by Purdue University each of the last three years.

Innovation helps CPH build customer relationships. Its Center for Client Retention collects and analyzes data from customers of competitors, categorizing sales and customer trends in more than 50 different ways to correlate product sales and types of customers. Its Emerging Products team studies how to use new technologies to deliver innovative products. The number of electronic products offered by CPH grew from 457 in 2008 to 1,927 in 2010.

CPH also excels at building relationships with its employees. Overall workforce engagement has exceeded the AAIM (formerly known as American Association of Industrial Management for Employers Association) national benchmark in seven out of eight cycles for the past three cycles. It was named one of the “Best Christian Workplaces in the United States” in 2009, 2010, and 2011.

An engaged workforce focused on serving customers produces impressive results. Each employee’s goals are aligned with department and corporate goals through CPH’s Goal Keeper System, which documents employee accomplishments, communication with management, and performance reviews, and which supports the company’s pay-for-performance system. This alignment extends to suppliers through CPH’s Vendor Certification Program. CPH shares scores on product quality, delivery times, and overall performance with suppliers semiannually and works with suppliers to move them from the bronze level to the silver level—the percentage has nearly doubled since 2009—and from silver to gold—70% of CPH’s vendors are in the gold level.

In a difficult time for the publishing industry, CPH’s earnings before interest, taxes, depreciation, and amortization as a percent of net sales were at plus 5% in 2010 compared to minus 10% for other comparable church publishers.

To read the complete profile of Concordia Publishing House, click here. To read more about the three 2011 Baldrige Award winners in healthcare, click on these articles:

• Schneck Medical Center
• Southcentral Foundation
• Henry Ford Health System

Let’s say the “top talent” is a single person who earns a taxable income of $150,000 a year, surely at the low end for really top talent. Minnesota taxes currently take $11,775 of that. The Minnesota rate is about the same rate as the states of Wisconsin, New York, and North Carolina, higher than Illinois, North Dakota, and Missouri, and lower than Iowa, California, and Maine.

Baker claims our high personal income taxes are already a barrier, but our rates are not out of line with most other states. The average state tax rate, not counting the states with no state taxes, is around 6 percent for a single earner taxable income of $150,000. One would hope the quality of life in Minnesota—not to mention the opportunity to work at companies like Ecolab, 3M, Cargill, General Mills, Medtronic, Mayo Clinic, Best Buy, and many others—would more than offset the extra couple grand in state taxes the top talent would accrue here. If that was truly a sticking point, I’m guessing Ecolab could bump their salary offer a couple percent to cover it.

Of course, companies like Ecolab could always move their operations to one of the states with no income taxes. I’m sure South Dakota would welcome them with open arms, but I’m guessing the “top talent” would be reluctant to follow.

Governor Dayton has proposed a new tax bracket of 10.95% for single filers making more than $85,000, which is 3.1% more than the current rate. At the new rate, that talent Baker is trying to lure or keep would pay $4,650 more in state taxes on his/her $150,000 annual taxable income. That’s about $200 from a twice-monthly check of around $3750. Does Baker really believe that a prospect who wants to take a job at Ecolab is going to decline the opportunity because of this? In this job market?

Of course, the greatest talent commands much more than $150,000. Baker himself made $3,220,200 in salary, non-equity incentive pay, and other compensation in 2010. If Dayton’s new bracket had been in effect, Baker would have sent almost $100,000 more to the State of Minnesota, reducing his twice-monthly paycheck to just $126,000.

I strongly believe that those who constantly call for lower taxes for corporations and rich individuals are self-serving. They see government as a necessary evil rather than a partner in building a better future for all citizens. It’s time for their race to the bottom to stop.

Despite its origin in manufacturing, the Award has little appeal for manufacturers today. Only a few manufacturers apply for the Baldrige Award each year while 54 healthcare organizations submitted applications in 2010. Last year, only three manufacturers, among 83 total applicants, applied for the Award, although some of the seven small business applicants may have been manufacturers.

Reviving Baldrige in manufacturing can help revive manufacturing in the U.S. Why is manufacturing so important? Jon Rynn lists six reasons it is central to the economy in an article in new deal 2.0:

1. Manufacturing has been the path to development. “From the rise of England in the 19^th century, to the rise of the U.S., Germany, Japan and the USSR in the 20^th, to the newly industrializing countries like Korea, Taiwan, and now China, manufacturing has been the key to prosperity.”
2. Manufacturing is the foundation of global “Great Power.” “About 80% of the world’s production of factory machinery has been controlled by what we would consider the ‘Great Powers.’ Until the 1950s, the U.S. had produced about 50%; we now produce less than China’s 16%.”
3. Manufacturing is the most important cause of economic growth. “No machinery industries, no sustained, long-term economic growth.”
4. Global trade is based on goods, not services. “According to the WTO, 80% of world trade among regions is merchandise trade—that is, only 20% of world trade is in services.”
5. Services are dependent on manufactured goods. “Services are mostly the act of using manufactured goods. You can’t export the experience of using something.”
6. Manufacturing creates jobs. “Most jobs, directly or indirectly, depend on manufacturing. In 2005, the Japanese manufacturing sector was 20.2% of its economy, in Germany it was 23.2%, and in the U.S. manufacturing accounted for 13.4%.” If we had the same percentage as Japan, we would have 7 million more high-quality, long-term, well-paying jobs. If we were equal to Germany, we would have 10 million more.”

There is evidence that manufacturing is reviving in the U.S. Now is the time to promote the Baldrige model as a proven approach to producing innovative, competitive, and profitable manufacturers.

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

• Four Brutal Truths
• Another Warning Sign for U.S. Manufacturing
• How Can You Stay on Top?
• Developing Critical Capabilities

Based on my experience, American organizations could have benefitted from Baldrige every year since the program started in 1988. I worked with four Baldrige Award winners in the 1990s and they all improved performance by integrating the Baldrige model. The need has been consistent for more than two decades even if this proven solution has remained largely invisible to most senior leaders.

Tannen focuses on one aspect of the Baldrige model to argue for its resurgence: quality management. He points to three companies that have suffered quality failures recently: Toyota, Johnson & Johnson, and GlaxoSmithKline. In Barron’s 2011 “Most Respected Companies” survey, Toyota dropped from number 6 to 46, J&J sunk from number 1 or 2 to number 25, and GSK fell from 36 to 51. Tannen believes that, for these three companies and their peers, “meeting the [Baldrige] program’s precision standards can help make the U.S. more competitive.”

I agree. I would amend his statement to say that integrating the Baldrige model can help make the U.S. more competitive, which is why the Award was launched in the first place, but I agree that Baldrige has the potential to transform the quality and effectiveness of American organizations.

How do we turn potential into reality? Despite a proven history of producing world-class results, Baldrige Award winners do not command media attention. Few executives seek to learn from them and even fewer act on what they learn. For the last six years, no more than 15 businesses have applied for the Baldrige Award in any year. That’s 15 out of approximately six million businesses in this country with a payroll.

So on the one hand we have businesses that are struggling to compete in a global economy and on the other hand we have a program that has hard data proving its effectiveness at doing just that and the program still cannot get any traction. Why is that? If any of you marketing geniuses out there have suggestions on how to make Baldrige more relevant, I would love to hear them.

According to Tannen, the annual Deming Prize awards ceremony is televised in Japan. Maybe we need a reality show like Amazing Race or The Apprentice that turns the quest for a Baldrige Award into television series. Because I can’t imagine many Americans, especially business leaders, watching a Baldrige award ceremony.