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

I wrote about Berwick’s nomination on April 19^th, pointing out that the immediate past president of the American Medical Association said that he “is widely known and well respected for his visionary efforts that focus on optimizing the quality and safety of patient care.” According to USA Today, his “nomination was immediately hailed as a brilliant choice by policy experts from across the ideological spectrum.”

The Centers for Medicare and Medicaid have not had a permanent administrator since October 2006. Obama nominated the perfect person to fix this problem while addressing a much bigger one: how to deliver high-quality patient care for less. Berwick’s Baldrige and healthcare background provide an unusual systems perspective for tackling an issue that is critical to the country and to all Americans.

Kudos to Obama for finding the right person and for making the recess appointment that puts him to work.

For those keeping score of Baldrige people in high positions, we now have Berwick at Medicare and Medicaid; Terry Holliday, former superintendent of Baldrige Award-winning Iredell-Statesville Schools, now commissioner of education for Kentucky; and E. David Spong, CEO of two Boeing divisions that won the Baldrige Award, now president-elect of the American Society for Quality.

Do you know of any others?

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.

You could start by firing the incompetent 5% across the U.S. but then you would need 185,000 new teachers to replace them. So Lemov asked another question: “What if we could make all teachers a little better?”

Sounds great, but what makes some teachers better? He decided he had better find out. He started with a great teacher in New Jersey, observing and videotaping him in action. He found another teacher and repeated the process, and then another, and another. Five years later he had recorded and analyzed hundreds of hours of videotape. He put his findings in a book: Teach Like a Champion: 49 Techniques That Put Students on the Path to College.

His techniques are concrete, specific, and actionable. Here’s an example:

“When you want them to follow your directions, stand still. If you’re walking around passing out papers, it looks like the directions are no more important than all of the other things you’re doing. Show that your directions matter. Stand still. They’ll respond.”

The article describes two other techniques that are in the book: (1) star teachers circulate around the whole space of their classrooms while less experienced teachers rarely leave the space between the blackboard and the first row of desks; and, (2) great teachers start class before the opening bell rings with a “Do Now” assignment on the board. As Lemov notes, making the first five minutes of class productive time instead of transition time is like adding 15 extra class periods to the school year.

The Baldrige model values identifying, sharing, and implementing best practices. Lemov’s book is all about best-practice teaching.

To read more about best practices in education, click on these articles:

• Lessons from High-Performing K-12 Schools
• A New Bottom Line for Schools – and the Rest of Us
• Inspiration for a New Education System
• Reinventing Education with Baldrige
• Baldrige and K-12: Not for the Faint-Hearted

Here are a few things that made Taylor a believer:

• The hospital sits on a wooded 160-acre campus
• All 300 rooms are private and designed so that family members can stay overnight if they wish
• All patients go right to pre-assigned rooms when they arrive
• A concierge helps patients and families with errands
• A “tea sommelier” recommends different teas for different situations
• There’s a day spa and an indoor farmer’s market every Wednesday
• There’s a 90-seat demonstration kitchen to teach patients’ families and the community how to prepare better food
• A celebrity chef spent two years creating 3,000 healthy recipes for patients to choose from
• The atrium features more than 2,000 trees lining paths to shops that sell products that can improve health

There’s a Baldrige connection to this story: West Bloomfield’s new CEO is Gerard van Grinsven, who joined Henry Ford after a long career with two-time Baldrige Award winner Ritz-Carlton. Skeptics questioned the wisdom of hiring someone with no healthcare experience to run the new hospital. Van Grinsven thinks it was a smart move. “I had a fresh pair of eyes and no baggage when I arrived,” he said. “The real opportunity for reinvention is to rethink the role of a hospital. How do we position ourselves as a community center for well-being—as a destination that helps everyone to lead a healthier life?”

His leadership and vision seem to be paying off: West Bloomfield is filled to capacity, patient satisfaction scores are very high, infection rates and other quality problems are at a minimum, employee morale is high, and turnover is low.

The innovation at West Bloomfield reflects the attitude of Henry Ford’s leaders. As Robert Riney, the system’s COO, said, “How can you look at the situation in our industry and say the answer is to make incremental change?”

To read more about quality in healthcare, click on these articles:

• 10 Healthcare Innovations
• A Healthcare Role Model
• Baldrige Saves Lives
• Why Baldrige? Saint Luke’s Makes the Case
• Disruptive Innovation and Healthcare

Jeffrey Smith came to Santa Clara County to help close a $230 million deficit. He implemented hoshin kanri (policy deployment), which some moronic union official described as “some airy-fairy thing.” Many of the people responsible for doing the planning ignored him and a number of department heads submitted budgets the old way, according to a story on MercuryNews.com (“Santa Clara County new executive’s strategy has fans, skeptics,” Julia Prodis Sulek, May 14, 2010).

Smith has taken a county hospital from the threat of losing $300 million in funding because of a pattern of violence to a national award for patient safety. He’s a former doctor, lawyer, and hospital administrator and he understands that the same old, same old just won’t work anymore.

“We can no longer rely on old processes and procedures,” he says. “My job is to enable the organization to make the dramatic changes, which will be difficult.”

Hoshin kanri, popularized by Toyota, helps an organization focus on a shared vision and goals and involves people in developing strategic and action plans to achieve those goals. I worked with Zytec in 1991 when it won the Baldrige Award and one of the reasons it won was its robust hoshin kanri process.

One of Smith’s responsibilities is the county’s Valley Medical Center, which faces budget problems. Seven of the county’s eight clinics are not accepting new patients because they are overloaded. Smith wants to help people solve the problems that will improve efficiency.

“The key is to unburden people,” he says. “The way to do that is to give them the tools to manage change and give them the time to actually solve problems.”

We wish him luck. One of his actions that upset people was to dismiss a $20 million Deloitte audit of Valley Med that his predecessor had approved. Instead, he had a $100,000 assessment of the hospital. Now, we can only hope he used the Baldrige Criteria for that assessment.

To read more about strategic planning and effective government, click on these articles:

• The City as a Baldrige System
• Transforming Politics
• Serving Citizens Better
• 10 Critical Questions: Strategic Planning
• Alignment and Integration

Lost in the hubbub generated by partisan attempts to denigrate the act is well-deserved praise for the following provisions:

• Patient-Centered Outcomes Research Institute, an independent body that will conduct research and communicate results on the risks and benefits of marketed drugs, devices, and medical products, including the most effective options.
• Trauma center program will fund research on emergency medicine.
• Workforce advisory committee will determine what steps to take to respond to and avoid doctor and nurse shortages.
• The Center for Quality Improvement and Patient Safety will research and share information about improving the quality and safety of healthcare.
• Wellness programs funded by grants to small businesses that establish them.
• Innovation center within the Centers for Medicare and Medicaid Services will focus on reducing program costs while maintaining or improving quality of care. (And by the way, wouldn’t President Obama’s nominee to lead this organization, Dr. Donald Berwick, be ideally suited for the job?)
• Collaborative Care Network Program aimed at coordinating and integrating healthcare services for uninsured or underinsured people.
• Quality metrics and measures for reporting and reimbursing for federal health programs.
• Bundled payments, to be tested in a pilot program, for providers to promote efficiencies and reduce spending.
• Incentives and penalties for hospitals based on performance.

Let’s hope politics doesn’t squash the potential of these much-needed quality initiatives.

To read more about quality in healthcare, click on these articles:

• Leading Change (Hopefully) at Medicare & Medicaid
• 10 Healthcare Innovations
• 99% Above Average
• A Healthcare Role Model
• Baldrige Saves Lives
• Dead by Mistake