The bottom-line question every senior leader asks about Baldrige is: What does this management system stuff have to do with the bottom line?

John Friel, former president and CEO of Baldrige Award-winner Medrad and the man responsible for leading the metamorphosis of its management system, answered that question for himself in 1989 when he visited Milliken, a textile manufacturer that had won the Baldrige Award the previous year. “They talked about two things that struck me,” said Friel. “They were the market share leader, charging the highest prices and getting the highest margins in the industry, and they had the highest customer satisfaction and retention. That’s when I was converted.”

Milliken’s second point put the responsibility to act on Friel’s doorstep. “They told everyone to stand on a chair and yell at the top of their lungs, ‘Management is the problem!’”

When Friel took over as Medrad’s CEO in 1998, he solved that problem by committing Medrad to annual Baldrige applications. The results came quickly. The company’s revenue started growing at 15% a year. It increased operating income as a percent of revenue, a measure of profitability, from 16 percent in 1999 to 20 percent in 2002. Its percent of “very satisfied” customers exceeded 70, with more than 80% very satisfied with its service. Employee satisfaction exceeded the best-in-class industry benchmark. In a national survey of 57 medical imaging companies, Medrad ranked second. None of its direct competitors finished in the top 20.

A management system consists of interrelated parts. Medrad’s approaches deliver the results described above, but what makes it the industry leader is how it manages the system in which those parts operate. Each element in the system serves Medrad’s mission and vision and not its own self-centered agenda. The synergy of this systems approach produces the company’s outstanding performance.

If you want to move your organization from the rutted path of mediocrity to the road to greatness, you must whip your management system into shape.

To read more about great organizations, click on these articles:

• Small Wonder
• A Healthcare Innovator
• A Healthcare Role Model
• Great, Not Perfect
• Why Baldrige? Saint Luke’s Makes the Case
• Baldrige and K-12: Not for the Faint-Hearted

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