It customized the Toyota Production System to its own culture and operations and applied the scientific method to new initiatives, using PDCA to experiment, test, and improve. It succeeds “in the face of four brutal truths that often derail organization improvements, preventing innovation and sustainable excellence,” according to Laurie Haughey, Milliken’s director of education services and marketing (article here):

1. The majority of performance-improvement programs fail. Milliken looked to Japan and the process controls taught by W. Edwards Deming to develop a sustainable management system. “More than 100 management employees made four exploratory trips to visit leaders of Japan’s best companies…to learn and adopt performance systems,” writes Haughey.
2. Organizations will founder unless they cultivate the trusting environment needed to perform honest self-analysis. First, Milliken adopted zero-based thinking: Its objective is zero, not some acceptable level of failure. Second, it uses value-stream mapping to identify the eight forms of manufacturing waste. Third, it encourages workers to expose problems and search for root causes.
3. Organizations often count the wrong things. “Rather than focusing solely on bottom-line numbers,” Haughey writes, “organizations should consider a more holistic approach in measuring corporate success.” In Milliken’s case, the foundation of its performance system is safety. Every meeting starts with a safety review. Hourly employees own and are responsible for 90% of a plant’s safety processes and education. As a result, Milliken has been rated one of the safest companies in America with a total injury and illness rate of just 0.50.
4. Facts don’t lie—but they don’t drive change either. While a lot of companies are developing balanced scorecards to monitor performance, few are using those scorecards to identify problems and make improvements. “Milliken views problems as opportunities to explore new ideas and innovation,” says Haughey, “not disasters that end in finger-pointing and blame.”

Milliken started its quality journey in 1980 when Roger Milliken brought in quality guru Philip Crosby to speak to his management team. I wrote about that event here. I’ve also written here about the impact Milliken had on John Friel, former CEO of two-time Baldrige Award-winner MEDRAD. As Haughey’s article shows, Milliken continues to advance in its journey to performance excellence.

Over the past 22 years, I’ve helped more than 50 organizations evaluate their management systems using Baldrige. While every question in the Baldrige Criteria is important, you can distill them into three smart questions that, when used daily, will set you apart from your peers while providing a proven, effective path to fixing most problems.

The first smart question is: What’s the process?

We’ve all sat in meetings called to solve problems. Too often, the first order of business is figuring out who screwed up. If you work in such an environment, what I call a “culture of blameology,” you’ve learned to keep your head down and your excuses ready.

You’re not going to change that culture all by yourself but you can shine a light on the real culprit deserving the blame: the process.

All work is process. Dictionary.com defines process as “a systematic series of actions directed to some end.” The steps you take to get something done are steps in a process. The actions you take every day are part of one or more processes. A process may exist entirely in your work group or department (functional) or you may have a chunk of a process that spans several departments (cross-functional). Many of our major processes have names like product design, teaching math, surgery, accounts payable, supply chain management, drivers’ license renewal, and customer service.

All work is process and when something goes wrong, more often than not, it’s a problem with the process and not with the people working it. Two of the world’s greatest quality experts, W. Edwards Deming and Joseph Juran, said that 80 to 94% of all of the problems an organization encounters are problems with the system, and the system is just a collection of processes. So when a problem arises and people start “blamestorming,” they should be blaming the process.

Going back to that definition of process, I would take issue with one word: systematic. Most processes are far from systematic. The processes you are part of are probably far from systematic. Unless there has been an ongoing effort to map the process, measure its performance, eliminate waste, shorten the time it takes, and improve its quality, it’s unlikely that a systematic series of actions is taking place.

Yet systematic is exactly what we want. Baldrige defines systematic as “approaches that are well-ordered, are repeatable, and use data and information so learning is possible.” I’ve done dozens of Baldrige assessments for all types of organizations and I can tell you that systematic approaches are very rare.

There’s a good reason for that: Organizations evolve. They start with a few people doing everything and then they grow and add more people and serve more customers with more products and services. The informality that worked well for a small group fails a larger organization. Processes evolve without any thought about how efficient or effective they are. It’s just the way things are done, the way they’ve always been done, until somebody asks if that way works or if there might be a better way.

That someone can be you. The next time you’re in a meeting to discuss what went wrong, ask: What’s the process?

You can read more about all three smart questions as well as how to become a process master, how to take charge of you career, and much more by signing up for your free copy of The Baldrige Edge. Just enter your name and email address in the box on the right.

Tomorrow: Smart Question #2: How do we know that?

The Baldrige Criteria define a management model focused on performance excellence. By answering more than 250 Criteria questions, organizations get a comprehensive snapshot of their management systems that they can use to identify strengths and opportunities for improvement. There are three versions of the Baldrige Criteria, one for businesses and nonprofits, one for healthcare, and one for education. You can view the 2011-2012 Criteria online here.

Who develops the Criteria?

The Baldrige Performance Excellence Program is responsible for the Baldrige Criteria, which are revised and published every two years. The Baldrige Program solicits input from Award applicants, members of the Board of Examiners, and others to update the Criteria.

What do the Criteria address?

The Baldrige Criteria are organized into an Organizational Profile and seven categories: Leadership; Strategic Planning; Customer Focus; Measurement, Analysis, and Knowledge Management; Workforce Focus; Operations Focus; and Results. Each category is divided into Items, and each Item is further divided into Areas to Address that pose the questions to be answered.

For example, the Leadership category has two Items: Senior Leadership and Governance and Social Responsibility. The Senior Leadership Item has two Areas to Address: Vision, Values, and Mission and Communication and Organizational Performance. Each Area groups questions by subject. For example, the Vision, Mission, and Values area groups questions into three subjects: Vision and Values, Promoting Legal and Ethical Behavior, and Creating a Sustainable Organization.

What do the Criteria value?

The Baldrige Criteria are built on a set of interrelated core values and concepts, which are embedded beliefs and behaviors found in high-performing organizations. If your organization shares these values—or wishes to demonstrate them—it would benefit from integrating the Baldrige model. The core values are visionary leadership, customer-driven excellence, organizational and personal learning, valuing workforce members and partners, agility, focus on the future, managing for innovation, management by fact, societal responsibility, focus on results and creating value, and systems perspective.

How do organizations use the Criteria?

Organizations that wish to integrate the Baldrige model assess the performance of their management systems by answering the questions in the Baldrige Criteria. This can be done as a self-assessment or as an application for a state award, the Baldrige Award, or international award programs. You can find out more about state and local award programs here, the Baldrige Award here, and international programs here.

How is a Baldrige assessment or application scored?

Responses to the Criteria questions are evaluated to determine the quality of the process or the results being described. The first six categories in the Baldrige Criteria ask about processes while the seventh focuses on the results of those processes. Processes are evaluated on four factors: approach, deployment, learning, and integration. Results are also evaluated on four factors: levels, trends, comparisons, and integration.

How can I find out more about the Baldrige Criteria?

The best sources of information about the Criteria are the booklets that contain the Criteria questions and descriptions, explanations of the core values, scoring guidelines, and more. You can find links to the 2011-2012 Criteria here.

To see how organizations respond to the Criteria questions, read the award application summaries of Baldrige Award recipients. Although the Criteria from previous years may differ slightly from the current Criteria, the Award winners’ responses demonstrate the quality of their processes and results and provide expert guidance on how to answer the Criteria questions. Just click on the “award application summary” links on the list of previous winners here.

To read more about the Baldrige model and Criteria, click on these articles:

• Baldrige Gets Results
• How to Integrate Baldrige
• Baldrige Core Values
• Learn from the Best: Application Summaries
• Scoring a Baldrige Application
• 10 Tips for Answering Criteria Questions

There’s a lot going on in this diagram and it all relates to how Heartland Health (HH) serves the health care needs of its communities.

The “tip of the iceberg” shows the diseases that most healthcare organization in the U.S. spend all of their time and money treating. HH provides this care through the Heartland Regional Medical Center (HRMC), a 353-bed tertiary care hospital, and Heartland Clinic (HC), a group of 107 physicians.

The causes of death from these diseases, human behaviors such as tobacco use, poor diet, and inactivity, are less visible but more important to actually preventing disease. HH promotes health and provides disease management and insurance to individuals and companies that need coverage through its Community Health Improvement Services (CHIS) and through HRMC, HC, and the Heartland Foundation (HF).

The drivers of these behavioral choices are the root causes of poor health. According to HH’s application, the Heartland Foundation “empowers youth, adults, and organizations to build better, healthier, and more livable communities and does so by creating dialogue, funding innovative collaboratives, and sponsoring initiatives promoting and enhancing the community.”

All three levels of the Health Pyramid support Heartland Health’s Vision, which is shown in the top left corner with key words—best, safest, healthy, and productive—aligned with the levels. Each level also aligns with a Heartland Health core competency: delivering the best and safest care, improving individual health, and improving community health.

Very few organizations in any industry can demonstrate such a profound knowledge of their customers, markets, competencies, and direction as Heartland Health does in this diagram. All of its resources are focused on improving the health of the people it serves. It is clear to those who work for Heartland Health what their organization does and how their hospital, clinic, or unit supports that. Everyone is aligned with the vision to make HH’s service area “the best and safest place in America to receive health care and live a healthy and productive life.”

To find out how Heartland Health does this, I encourage you to read its award application summary. If you’re wondering why this alignment is so important, check out its results in Category 7.

To read more about healthcare from a systems perspective, click on these articles:

• Why Healthcare Needs Baldrige
• Baldrige Saves Lives
• AtlantiCare’s Baldrige Journey
• Catholic Healthcare Systems Excel
• Why Baldrige? Saint Luke’s Makes the Case

Baldrige.com now averages more than 200 visits a day from 170 unique visitors. Each visitor views more than five pages and very few—just 1.3%—leave after looking at one page. That’s called “bounce rate,” and ours if very low.

We’re getting visitors from all parts of the globe: 118 countries to be exact. More than half come from the United States, with the next most from India, Australia, United Kingdom, Philippines, Canada, and New Zealand. New Zealand has been a Baldrige hotspot for years.

The purpose of Baldrige.com is to provide the information you need to build the organization you want. I spend a lot of time checking out related Web sites and I can tell you that no other site focuses on how to improve your management system like Baldrige.com does. In fact, you can assign most information on the Internet that has to do with work life into three buckets: personal, personality, and financial.

• Personal posts focus on what you can do to improve your own career.
• Personality posts tell the stories of workplace celebrities, which are usually company founders and CEOs.
• Financial posts keep score of how organizations perform in the only way most sites know: financial performance.

All of these posts can be interesting but very few of them give you any insight into how to develop a more effective organization. For that, you need Baldrige.com.

I invite you to spend a few minutes exploring a topic that interests you. Just click on one of the categories at the top of the page or click the “Search” tab in the third column and enter your area of interest. Read a few articles. Tell us what you think or what you’d like to see.

Thanks for your support.

In “Lean Confusion” (IndustryWeek, August 18, 2010), Jill Jusko traces the growth of lean in manufacturing, noting that 90 of the 100 IndustryWeek Best Plants from 2005 to 2009 demonstrated significant or complete implementation of lean. “Those same plants reported median 30% reductions in manufacturing cycle times over the past three years, median scrap reductions of 33%, and median productivity improvements of 24%,” according to Jusko.

But lean, like Baldrige, is about far more than quality and cycle time improvements: They are transformative systems, changing the cultures of the organizations that implement them. They help shape strategy, redefine measurement, and engage employees in the process.

Jusko describes an automotive industry supplier, Autoliv, as an example of the human side of lean. Last year at its Ogden, Utah, plant, “managers received 63 implemented ideas per person.” Most suggestion systems are lucky to garner one or two ideas per person per year, and not all of those are implemented. Imagine how good your processes could become if everyone who worked on them initiated more than one improvement every week!

An organization cannot get these kinds of results without engaging and empowering its employees, which is a cultural change for many organizations but a competitive advantage when it occurs.

As IndustryWeek’s Best Plants and Autoliv show, implementing lean differentiates them from their competitors by making their management systems a competitive advantage. Baldrige has the same effect.

To learn more about lean, check out a book called The Antidote by Anand Sharma and Gary Hourselt.

To read more about the transformation power of Baldrige, click on these articles:

• What People Need to Hear
• 10 Steps to World Class
• How to Integrate Baldrige
• Baldrige Gets Results

The decline in ROA has occurred despite steady improvements in labor productivity, which have occurred despite stagnant wages for the labor. As a result, businesses have been paying no more for an increasingly productive workforce, which pretty much eliminates wage control and productivity as factors in improving ROA.

So how can leaders reverse the trend?

John Hagel III and John Seely Brown address this issue in “Six Fundamental Shifts in the Way We Work” (HBR, August 17, 2010). The six shifts they mention are:

1. Management practices and corporate institutions are fundamentally broken. Most have not yet figured out how to compete more successfully.
2. The source of value creation is shifting from your stock of knowledge to the flow of knowledge, and most executives lag in understanding what this means for their companies.
3. Management innovation is not enough: Institutional innovation, exemplified by China’s open production and design models and India’s open distribution models, are needed.
4. A new kind of performance curve is emerging: The collaboration curve, which brings together participants in a carefully designed environment to make rapid leaps in performance improvement.
5. Talent development is broader than training programs: People need to learn new skills and behaviors through their involvement in the work of the management system such as strategic planning, process management, and measurement.
6. Passion is everything. According to the authors’ survey in 2009, less than 20% of employees in U.S. industries say they are passionate about their work. “Passionate workers participate much more actively in knowledge flows that are the new key to value creation,” the authors write. “If you can help make your employees more passionate, you can create value in today’s economy.”

You can improve your performance in several of these areas by integrating the Baldrige model. The model helps fix broken management systems, promote talent development, and engage employees in what you are trying to accomplish. Integrating the Baldrige model will also free up resources to explore knowledge flow, institutional innovation, and collaboration.