What Differentiates Baldrige Award Winners (Part 3)

In the first two articles in this series, I described five of the seven characteristics of organizations with sound management systems: (1) they think process; (2) they act on data; (3) they know where they’re going; (4) they align activities; and, (5) they blur boundaries. They exemplify all 11 Baldrige core values but one stands out: They have a systems perspective, which, according to the Baldrige Criteria, “means managing your whole organization, as well as its components, to achieve success.”

They also share these final two characteristics:

6. They treat people well. That means everyone the company touches: employees, customers, suppliers, community members—everyone. The striking difference between companies that treat people as commodities and companies that treat them well was captured in the transformation of Wainwright Industries. In the early 1990s, the leaders of this small Missouri-based manufacturer of machined parts listened to a speaker describe how his company thrived because of a sincere trust and belief in people. One of Wainwright’s leaders wondered what that meant. The CEO didn’t have a good answer, and that bothered him. What would Wainwright look like if it sincerely trusted and believed in its people?

The answer changed the company. A sincere trust and belief in people became one of its core values, and that value guided its actions. Quality improved. Safety improved. Customer satisfaction improved. Gross profit jumped 62 percent in just three years. And employees rewarded the company’s trust by generating more than one implemented improvement suggestion per employee per week. Most American companies struggle…

What Differentiates Baldrige Award Winners

Part 1 of 3

Over the last twenty years working with dozens of organizations on Baldrige assessments and with five Baldrige Award winners, I’ve identified seven characteristics that differentiate organizations with sound management systems from those without. Here are the first two:

1. They think process. All work is process. The process flows through people: those who supply it on the front end, those who use those materials to produce products or services, and those customers who receive the products or services.

Companies don’t naturally think process, often because their structures prevent it. They organize around functions—finance, human resources, operations, administration, etc.—but processes, especially those processes critical to a company’s success, are not bound by functions. They are cross-functional. Mediocre companies manage their functions but not their processes. When problems occur, they blame them on departments or work units or, if their “culture of blameology” is really mature, on specific individuals. W. Edwards Deming believed that less than 4% of the problems any company faces can be attributed to individual employees. Leaders blame people when they should be blaming—and managing—the process.

2. They act on data. At Medrad, the world’s leading manufacturer of disposable medical imaging products, the mantra is: “How do we know that?” No assumptions. No best guesses. No unsupported claims. No slack for office or position. If you lack accurate, reliable, and timely data to define a problem, propose a solution, improve a process, develop a plan, serve a customer, review performance, or do any other task that depends on sound data for…

Leadership Matters Most

The ease or difficulty in transforming a management system lies with the leaders of that system. I’ve worked with five Baldrige Award winners and in every case, their executives drove the renovation of their management systems. No company did it the same way: Some had it mastered in a few years while others took a decade or more. Not every senior leader felt strongly about the Baldrige model or the evaluation and improvement process it supports, but as long as the top executive did, it didn’t matter.

Executive attitudes toward creating a sound management system regularly surprise me. Those who recognize its value preach this systems perspective with the fervor of true believers. Those who don’t buy into it bide their time until the boss leaves and they can return to what they know is best. The trouble is, what they know is best is rarely as good as the systems approach they abandon.

Motorola, IBM, and AT&T dominated in the late 1980s and early 1990s when their leaders conducted regular, formal assessments of their management systems. As that process waned, so did their fortunes. AT&T formed its Universal Card Services division in 1990 with a management system based on the Baldrige model. In its first 30 months of existence it rocketed to second largest in the U.S. credit card industry, winning the Baldrige Award in 1992.

Thirty months after that it floundered, hobbled by new leadership that deserted the systems approach in favor of “better ideas.” Thirty months after that, in October…

Sustainability Forces Wheel

In strategic planning, the quality of the plan depends on the quality of the information collected and analyzed to guide the plan. The Baldrige Criteria ask how you collect and analyze information about your strengths, weaknesses, opportunities, and threats; early indications of major shifts in technology, markets, products, customer preferences, competition, or the regulatory environment; long-term organizational sustainability; and your ability to execute your strategic plan.

The goal is to build a sustainable organization that can survive change in whatever form it takes. Andrew Winston has created a tool to help navigate the forces that may affect your organization’s survival. He calls it the Sustainability Forces Wheel.

In “A New Tool for Understanding Sustainability Drivers” (HBR, July 13, 2010), Winston describes the three rings that make up his wheel and his idea to “spin” the wheel to line up different forces on each ring, which could then spur discussion among leaders about what that combination might mean for their organization. For example, he looks at the issues that currently line up at 9:00: “Consumers increasingly want to know what’s in products and where they come from; technology is enabling more data on a product’s origins; and there’s no denying the rising concerns about chemicals and toxics in our bodies and our children’s bodies. If your company operates in the consumer products world, how are you handling this trifecta of concerns?”

From a Baldrige standpoint, your strategic planning process should include a systematic approach to identifying the factors that are likely to impact your short-term…