Here are her ten insights and how they relate to the Baldrige model:

1. You gain a competitive advantage by creating unique value for customers. Customer-driven excellence is a Baldrige core value, defined as an organization’s performance and quality being judged by its customers. If customers rate your performance and quality high, you will gain a competitive advantage.
2. Your strategy must also clarify what the organization will not do. The Baldrige model asks several questions about how you develop strategies that will help you prioritize your strategies.
3. “Competition is about profits, not market share,” writes Magretta. You grow a company by increasing profits, not market share.
4. Brilliant strategies will not lead to performance excellence unless you execute them. The Baldrige Criteria devote an entire section to strategy implementation.
5. Good strategies are interconnected and build on core competencies. The Baldrige Criteria ask how your strategic objectives capitalize on your core competencies and balance short- and longer-term challenges and opportunities.
6. While it’s important to be flexible, your organization must stand for and excel at something. You must have the resources and capabilities to execute the plan
7. You need not predict the future to commit to a strategy.
8. “Vying to be the best is an intuitive but self-destructive approach to competition,” Magretta writes.
9. You need both a distinctive value proposition and a value chain tailored to deliver it. The Baldrige model promotes the development of a work system that capitalizes on your core competencies, delivers customer value, and achieves success and sustainability.
10. Your strategy should delight your most important customers while deliberately making your least important customers unhappy. The Baldrige Criteria ask which customers you intend to pursue, and why.

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

• Revolutionary Thinking
• What Path Is Your Organization Taking?
• Effective Strategic Initiatives
• 10 Tests to Assess Your Strategies
• The Vital Few

Your organization needs processes for:

• Assessing workforce capability and capacity needs and preparing employees for changing needs
• Recruiting, hiring, placing, and retaining new employees
• Organizing and managing your workforce to accomplish work, capitalize on your core competencies, reinforce a customer and business focus, exceed performance expectations, and address your strategic challenges and action plans
• Managing your workforce to ensure continuity, prepare for growth, and prevent layoffs or minimize their impact if they become necessary
• Creating a healthy, safe, and secure work environment
• Supporting employees through policies, services, and benefits

Best practices to consider:

• The organization has developed a workforce plan that identifies its current capability and capacity and anticipates future needs based on different scenarios.
• The hiring process focuses on choosing people who fit the organization and providing training and support to ensure that they are retained.
• The workforce is organized and managed to benefit from diversity (gender, age, race, etc.).
• Strategic leadership, careful planning, and a commitment to employee well-being enables the organization to ramp up during times of rapid growth and find new opportunities when the market slows without destabilizing the workforce.
• The organization has identified and tracks performance on key measures of workforce health, safety, and security.
• The policies, services, and benefits the organization provides are tailored to the needs employees and support employee engagement and satisfaction.

Common problems areas:

• The organization does not have a clear understanding of the capabilities and capacity of its workforce or what it may need in the future.
• Turnover, especially during the first year of employment, is high because the candidates were not a good fit for the organization, orientation was inadequate, or expectations were not clearly defined.
• The organization lays people off when business slows rather than planning for slowdowns or diverting employees to growth opportunities.
• The safety of employees is not the organization’s top priority.

To read more about workforce environment, click on these articles:

• Know Your Employees
• A Culture That Values Employees
• How to Hire for Values
• Baldrige Values Diversity
• Workforce Well-Being
• Best-in-Class Workforce Planning

Bain & Co. decided that integrating Baldrige was too obvious, so it spent ten years studying more than 2,000 companies to find the formula for success. Jill Jusko lists the five principles Bain came up with in “A Repeatable Formula for Success” (IndustryWeek, March 16, 2010):

1. Know what the core of your organization is and how you’ve made it work for you. This may include four to seven assets such as brand and talent. In Baldrige terms, it means identifying your core competencies and building on them.

2. Have up to ten non-negotiable principles upon which your organization is built. Baldrige calls these your mission, vision, and values.

3. Prefer distributed leadership, which means fewer layers of management. Baldrige doesn’t prescribe distributed leadership, but it does promote empowerment and agility, which are often associated with fewer layers of management.

4. Keep information coming in from customers through a strong, closed feedback loop system. The Baldrige Criteria ask a number of questions about how you build a customer culture and how you listen to customers.

5. Keep the number of key operating measures small and be sure everyone at levels understands and believes in them. Again, Baldrige doesn’t tell you to keep the number of key measures small, but it does ask how you select, align, and integrate your key measures for tracking daily operations, reviewing performance, and tracking progress on your strategic plan. The Criteria also ask how you make data and information available and accessible.

To see what I mean about the success of Baldrige organizations being repeatable, check out these results:

• Financial Results
• Customer Results
• Workforce Results
• Quality Results

To read more about the Baldrige formula for success, click on these articles:

• 10 Questions to Ask about Everything You Do
• How to Integrate Baldrige
• Leading the Integration of Baldrige
• 5 Added Values of the Baldrige Process
• Experts Tell You What to Fix
• 10 Steps to World Class

In “Why Most CEOs Are Bad at Strategy” (Harvard Business Review, January 6, 2010), Martin argues that most executives and strategy consultants are good at strategic analysis but not at strategy, which requires creative insight. “Strategy is a creative act,” he writes, “and the way to produce good strategy is to go beyond basic analysis to creatively integrate your choices concerning where you play and how you propose to win.”

The Baldrige Criteria ask a number of questions to guide your strategic choices including:

• How do you identify potential blind spots in your planning?
• How do you address long-term sustainability?
• How do you determine your strategic challenges and advantages and your core competencies?
• How do your strategic objectives address them?
• How do your strategic objectives address your opportunities for innovation?

The focus of the Criteria leans more toward analysis than creative insight. That’s not to say that Baldrige Award recipients haven’t excelled at figuring out where to play and how to win, but integrating these choices creatively to plan the most promising course of action is not something the Criteria specifically request. The Customer Focus category comes close with questions about how you identify current and future customer groups and markets, how you determine which customer groups and markets to pursue, how you identify and anticipate key customer requirements and expectations, and how you use this information to improve marketing and identify opportunities for innovation.

Still, as Martin suggests, it’s important to focus all of these strategic and customer processes on where you play and how you propose to win, or how you propose to excel if your organization is a school, nonprofit, or government agency. That’s a leadership development and strategic planning issue. “A good strategy is the product of the creative combination of two disparate logics rather than a single linear analytical logic flow,” writes Martin, “but CEOs and ‘strategists’ are seldom conditioned to become skilled at the requisite creative combination.”

To read more about strategic planning, click on the following articles:

• Anticipating Disruptive Change
• What Are Your Critical Success Factors?
• Identifying Capabilities Your Organization Needs
• Know Thyself—and Act Accordingly

“There’s probably no organizational attribute that’s more important today than adaptability,” writes Gary Hamel, author and the world’s leading expert on business strategy, according to Fortune magazine. “In our topsy turvy world, every organization is teetering on the brink of irrelevance, and unless it can change as fast as change itself, it will soon tumble off the ledge.”

Baldrige organizations promote adaptability by valuing agility, a focus on the future, and a systems perspective. They constantly and systematically renew themselves by questioning what markets to serve and what the customers in their markets require, how to make their processes more efficient, and how to engage their employees in change and innovation. Rather than reacting to change, they deploy processes that help them adapt and grow.

In “Outrunning Change—the CliffsNotes Version” on WSJ Blogs (October 21, 2009, click on Part 1 here and Part 2 here), Hamel shares his thoughts on how to build a highly adaptable company:

Anticipation

• Face up to strategy decay.
• Learn from the fringe. “The future will sneak up on you unless you go out looking for it.”
• Rehearse alternate futures. Think through the implications of trends and how you will react.

Intellectual Flexibility

• Regard every belief as a hypothesis. “The biggest barriers to strategic renewal are almost always top management’s unexamined beliefs.”
• Invest in genetic diversity. Seek diversity in the executive committee.
• Encourage debate and dialectic thinking. Ask your colleagues, “Where do I have this wrong? How do you see this differently? What would you do here?”

Strategic Variety

• Build a portfolio of new strategic options.
• Build a magnet for great ideas.
• Minimize the cost of experimentation. You need to master the art of rapid prototyping.

Strategic Flexibility

• Disaggregate the organization. “Big things aren’t nimble.”
• Create real competition for resources. Existing businesses sustain their budgets year-to-year at the expense of new ventures and breakthrough projects.
• Multiply the sources of funding for new initiatives. A “paucity of funding sources squelches innovation.”

Structural Flexibility

• Avoid irreversible commitments. “Managers have often traded away future flexibility for short-term economic advantage.” Stop doing that.
• Invest in flexibility. You need room to maneuver. “Paradoxically, building a flexibility advantage often requires a degree of operational standardization.” That sounds like Baldrige to me.
• Think competencies and platforms. Define your organization by its core competencies and broad platforms rather than products and services.

Structural Adaptability

• Embrace a grand challenge. Involve employees in creating a shared vision that challenges them “to do something big, exciting, or noble.”
• Embed new management principles. Value variety, decentralization, serendipity, and allocational flexibility.
• Honor resilience-friendly values. The Web reveals what those values are: community, transparency, freedom, meritocracy, openness, and collaboration.

To read more about ideas and processes that support adaptability, click on these articles:

• 10 Questions to Ask about Everything You Do
• How to Integrate Baldrige
• 10 Steps to World Class
• Anticipating Disruptive Change
• Identifying Capabilities Your Organization Needs
• Co-Creating a Shared Vision
• The Priorities of Leadership

P.1a in the Organizational Profile asks fundamental questions about your operating environment. A few are easy to answer, such as what products and/or services you offer and how you deliver them. Others require more thought:

• What are the key characteristics of your organizational culture? You may not have thought much about this. For most organizations, culture is what happens when you’ve been around for awhile. Key characteristics others frequently mention include a focus on customers/patients/students, empowered employees with few levels of management, extensive use of teams, promoting innovation throughout the organization, valuing employee safety, and pursuing world-class quality and cycle time.

• What are your core competencies? How do they relate to your mission? Core competencies are your organization’s areas of greatest expertise that help you fulfill your mission and differentiate you from your competitors. If your core competencies don’t align with your mission, you’ve got a problem.

• What are the key factors that motivate your employees to engage in accomplishing your mission? Later, the Criteria ask how you determine these factors, so don’t just pull them out of a hat. High-performing organizations often pull their lists of key factors off employee surveys after systematically verifying that the factors addressed by the survey do, indeed, affect workforce engagement.

The Organizational Profile is the foundation upon which a Baldrige assessment is built. Everything that follows is supported by and linked to the information the Profile seeks.

You can read all of the questions in the Profile in the Criteria booklets, which are available online here.

To learn more about these questions, read:

• What Are Your Organization’s Core Competencies?
• The Baldrige Criteria
• Criteria Structure
• 10 Tips for Answering Criteria Questions

The Economist recently described the problems Toyota faces and how it is addressing them (“Losing Its Shine,” December 10, 2009). While the company seems to have fixed its quality issues—Toyota had 18 of the 48 leading vehicles in the recent Consumer Reports reliability study—quality is no longer a big differentiator in the automobile industry. Instead, Toyota’s “vehicles will inevitably be judged increasingly on more emotional criteria, such as styling, ride, handling, and cabin design.”

Akio Toyoda, grandson of the company’s founder and its president since June, recognizes the need for innovative design. He recently said, “I want to see Toyota build cars that are fun and exciting to drive.”

That may be a challenge. Toyota’s value proposition has been built upon quality and reliability. Its culture, defined by the Toyota Production System, completely supports that value proposition. Steering in a new direction using a system developed for a different purpose will prove difficult.

That’s the strategic challenge Toyota faces. It has set the standard for quality and reliability in its industry and rose to the top on these core competencies. It forced its competitors to catch up and most of them did. Now it must develop new competencies in design, innovation, and customer engagement to remain the industry leader.

To find out more about strategic challenges and advantages, read:

• Developing Critical Capabilities
• Being Good at the Right Things
• What Are Your Critical Success Factors?
• Identifying Capabilities Your Organization Needs
• What Are Your Organization’s Core Competencies?