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

Delivering quality products and services that meet customer’s needs separates the leaders from the pack in a competitive marketplace and it is essential to survival in a competitive global marketplace. Those organizations that engage in a relentless pursuit of delivering high-quality products and services outperform those that do not. MEDRAD, one of the 2010 Malcolm Baldrige Quality Award winners, uses a systematic voice-of-the-customer approach to better focus on customer needs. Customer information is collected from listening posts, trade associations, benchmarking, and other mechanisms deployed globally and tailored by region, business, and language, and then communicated to the appropriate sales team for analysis. The success of these tactics can be easily recognized in the numbers: MEDRAD consistently scored 80% or higher compared to 50% for the best-in-class benchmark for service support using the Net Promoter (NP) system.

Your customers’ satisfaction depends on having the right quality of goods and services to meet their needs. This requires a clear definition of the meaning of quality. We define quality as fitness for purpose, meaning no matter what you produce; a good or service, it must be fit for its purpose. To do this, every good or service must have the right features to satisfy customer needs and must be delivered with few failures. This is true in any industry. Take Southcentral Foundation of Alaska for instance, one of the 2011 winners of the Baldrige Award in the Health Care category. Their unique Nuka System of Care is a relationship-based health care delivery system.  Nuka’s organizational strategies and processes; medical, behavioral, dental, and traditional practices; and supporting infrastructure work in partnership with the Native Community to support physical, mental, emotional, and spiritual wellness. The system is owned, managed, directed, designed, and driven by Alaska Native people.

This customer focused mindset needs to come from top management and trickle on down through the rest of the organization. In an interview by Steve Denning with Clayton Christensen entitled How Pursuit of Profit Kills Innovation and the U.S. Economy, Christensen makes a great point in stating, “Making money and corporate survival now depend not merely on pushing products at customers but rather on delighting them so that they want to keep on buying. To prosper, firms must have knowledge workers who are continuously innovating and delivering a steady supply of new value to customers and delivering it sooner.” Christensen speaks the truth; organizations must continuously satisfy their customers but they must also supply them with new value and do so faster. The customer is your boss, and the customer still comes first.

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

Source: “Clayton Christensen: How Pursuit of Profits Kills Innovation and the U.S. Economy.”

Effective planning will help to prevent problems, provide a response if problems occur, and make available information and support needed to maintain public awareness, safety, and confidence.  Henry Ford Health System, one of the winners of the 2011 Malcolm Baldrige Quality Award for Health Care, know how to think about these big-picture issues; HFHS community benefit initiatives have increased by almost 78 percent since 2006.  HFHS’s commitment to patient safety is further emphasized through its evidence-based global harm campaign (evidence-based medicine integrates an individual doctor’s examining and diagnostic skills for a specific patient with the best available evidence from medical research) to reduce or eliminate some 23 sources of harm.  According to the Institute for Healthcare Improvement, this program is a national best practice.  HFHS’s performance in relation to overall global harm has improved from approximately 60 harm events per 1,000 patients in the first quarter of 2008 to 40 harm events per 1,000 patients in the second quarter of 2011.  A prime example of this success is HFHS’s reduction in central-line infections from 10 per year to three per year since 2008.

For many organizations, the product design stage is critical from the perspective of public responsibility.  Design decisions impact production processes and often the content of municipal and industrial waste.  Effective design strategies will anticipate environmental concerns and responsibilities.  Organizations must not only strive to meet all local, state, and federal laws and regulatory requirements, but they can treat these and related requirements as opportunities for improvement beyond mere compliance.  There is always room for improvement!

Organizations can stress ethical behavior in all stakeholder transactions and interactions, which should be monitored by the organization’s governing body.  “Societal well-being and benefit” refers to leadership and support – within the limits of an organization’s resources—of publicly important purposes.  A great example of this can be found at HFHS. Their workforce supports southeast Michigan with annually increasing levels of community service.  This includes the American Heart Association’s Heart Walk (for which HFHS is the number one contributing health system in the country and third-ranked company overall in 2011); the growing number of volunteers involved in philanthropic activities (from fewer than 1,000 in 2006 to greater than 2,300 in 2011); and an increasing number of volunteer hours (from under 300,000 in 2006 to above 500,000 in 2010).  Other examples might include improving education and healthcare in your community, pursuing environmental excellence, being a role model for socially important issues, practicing resource conservation, performing community service, improving industry and business practices, and sharing non-proprietary information.  Setting the standard as a role-model organization within your community will influence other organizations, private and public, to partner for these purposes.

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

Source: 2011 Malcolm Baldrige Quality Award Winners

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.

Dr. Juran was a vocal advocate for the Baldrige program. I interviewed him in 1991 for my first book on the Baldrige model and he was kind enough to write a reference for the book. At the end of the interview, he not only invited me to his annual conference, then called IMPRO, but he offered to pay all of my expenses to attend. Before the conference, Dr. Juran delivered, “Making Quality Happen,” which remains one of the most informative sessions I’ve ever taken part in about the value of a systems approach to quality management and improvement.

I quoted him in my book, The Baldrige Quality System: “Prior to the Baldrige Award, any company that didn’t have a quality revolution was confused. Quality consultants were tugging them in different directions. We lost a decade that way. The criteria can become the focal point around which the renaissance can be built.”

Dr. Juran’s prediction has not come true—yet. While Baldrige still has the potential to inspire a quality and performance renaissance, it has not gained the traction enjoyed by programs such as Lean and Six Sigma, in part because Baldrige is not a program. It does not prescribe the exact path you must take to gain world-class results, but helps you understand all of the things you need to improve to achieve performance excellence. It’s a systems approach to building an effective management system that will help your organization reach its goals, now and well into the future.

Baldrige.com now offers more than 600 articles about this systems approach to world-class performance. I can’t think of a better organization to build on this foundation that the Juran Institute, which integrates the Baldrige model in the services it provides. You will want to bookmark this site and check back frequently for the insights and ideas Juran will be posting.

I want to thank you for visiting Baldrige.com. I have enjoyed sharing what I learn with you and look forward to continuing to learn from the quality leaders at the Juran Institute.

Economists Albert N. Link from the University of North Carolina and John T. Scott from Dartmouth College published their evaluation of 45 Baldrige Award applicants on December 16, 2011. The report is available here (pdf). The Baldrige program asked the 274 organizations that submitted applications from 2007 to 2010 to participate in the study and 45 accepted the invitation. Link and Scott used a counterfactual evaluation method to determine the benefit-to-cost ratio, asking what the private sector would have had to invest to achieve the same level of benefits through the Baldrige program. Benefits were realized in three areas:

• Savings to the applicants in investment costs to achieve the same level of benefits from their performance excellence strategies as they realized from the Baldrige program
• Gains by consumers in greater satisfaction from higher quality products and services
• Gains to the economy from saving scarce resources because the Baldrige Criteria were available

As I understand it, the counterfactual evaluation case made by the study is that organizations that integrate Baldrige increase demand because they offer higher quality products and services and they reduce costs because of more efficient operations. They earn more and spend less.

Link and Scott describe the methodology in their report. They concluded that the ratio of social benefits to social costs among the 45 organizations that responded to the survey was 351:1 while the ratio for all Baldrige Award applicants was 820:1. They also extrapolated these ratios by sector: 456:1 for healthcare, 357:1 for manufacturing, and 119:1 for education. While they cautioned against attaching too much significance to these numbers because of the small sample size for each sector, they emphasized that integrating Baldrige benefits all sectors, arguing that the Baldrige program’s benefits “are not specific to any one sector but reflect benefits realized across all of the sectors.”

In their concluding statement, Link and Scott state: “The Baldrige Performance Excellence Program is a public-private partnership that…creates great value that could not be replicated by private sector actions alone.”

While the public-private partnership equation is changing with the end of federal funding, the value of the program remains the driving force behind those who are working to reinvent Baldrige to continue to bring value to the U.S. economy.

The opportunities for improvement revealed by a Baldrige assessment contain the logic for acting upon them: Your results are flat or negative because this or that process is broken. Fix the process and improve your results. Measure your progress. Validate it with your customers. Repeat.

Unfortunately, the logic of the change is usually lost to everyone but the leaders who enact it, which can render it ineffective. In a recent article on Forbes, author Carol Kinsey Goman explains why human beings resist change. According to brain analysis technology, our work habits are controlled by a part of the brain called the basal ganglia. When we do things the way we’ve always done them, we feel good. Change stimulates the prefrontal cortex, which is linked to the amygdala, which controls our “fight or flight” response. When change overwhelms the prefrontal cortex, the amygdale triggers physical and psychological disorientation and pain. Even if we know logically that a change is necessary and positive, our brains can react negatively.

Goman offers six suggestions for helping your workforce handle change:

1. Trust people to see the need for change. Communicate information that shows why change is needed. Provide opportunities for people to ask questions and discuss the implications of the change. Help employees reach the conclusions that prompted you to act.
2. Make new ideas become familiar. You cannot over-communicate the reasons for change or how the changes will occur. Develop a communication strategy that uses all available mechanisms—town hall meetings, focus groups, staff meetings, shift meetings, intranet, newsletters, etc.—to talk about the change. As Goman notes, “It takes a lot of repetition to move a new or complex concept from the prefrontal cortex to the basal ganglia.”
3. KISS your communication. Keep is simple. Condense the change into two or three critical goals.
4. Never underestimate the power of a vision. Gorman writes, “I’m talking about a clearly articulated, emotionally charged, and broad picture of what the organization is trying to achieve.
5. Don’t “sugar-coat” the truth. Be honest and realistic about expectations the how the change will unfold. Any deception, whether intentional or not, will be exposed and will heighten anxiety and distrust.
6. Watch your body language. “When discussing organizational change initiatives, there are two conversations taking place, and the second, nonverbal one, can reinforce or sabotage your verbal message,” says Goman. People believe what they see more than what you say, which means you must totally believe in the change before you can convince others of its value.

Every organization must change to survive and thrive. A systematic approach to change that addresses these six suggestions and considers the way our brains are wired can help make change just another work habit.