Which Way to Operational Excellence?

Posted by Dawn Marie Bailey

Dorothy: Now which way do we go?
Scarecrow: Pardon me, this way is a very nice way.
Dorothy: Who said that?
[Toto barks at scarecrow]
Dorothy: Don’t be silly, Toto. Scarecrows don’t talk.
Scarecrow: [points other way] It’s pleasant down that way, too.
Dorothy: That’s funny. Wasn’t he pointing the other way?
Scarecrow: [points both ways] Of course, some people do go both ways

When it comes to new business/improvement initiatives, there are several directions that one can go. But, typically, the most successful initiatives are built on lessons learned about what has worked and what hasn’t and the outcomes desired (one could start from scratch, too, but that seems to ignore lots of tried and true wisdom).

For the past thirty years, several criteria and standards have come onto the scene so that folks don’t have to reinvent the wheel when they want to conduct strategic planning, learn leadership best practices, adhere to standards, or improve a product or process, for example. The satisfaction that comes from improving (or winning an award to validate the improvements) is universally understood as a good thing both for an organization and for the people (including customers) involved. But what an organization can learn along the way is often underestimated.

“Journey” is not always a well-received word because it connotes something that takes a long time and can be arduous (Dorothy had no idea what her journey would be like when she set off on the yellow brick road, but, oh, what she learned along the way), but any Baldrige Award recipient will tell you that short-term gains are what need to be celebrated, because sooner or later those short-term improvements lead to long-term achievements that can improve an entire culture.

For organizations looking to become more sustainable, more customer-focused, more recognized, more competitive, there are many paths to operational excellence, and each offers its own benefits along the way.109507507.thb

Implementing the Baldrige Excellence Framework (or simply using it as reference material) is one path to organizational excellence, with organizations applying for the Baldrige Award as a way to focus on what needs to be improved, prioritize resources, and gain feedback and inspiration for their improvement initiatives. But there remains some misunderstanding about the benefits of an application.

The Baldrige Award is not a consumer award that compares companies or can be bought. And it’s not a certification (although most award winners consider it a stamp of approval; for example, according to Baldrige Award recipient North Mississippi Health Services, Toyota chose to locate a factory close to its headquarters because the health system had proven its quality through winning a Baldrige Award). So what’s so special about the Baldrige Award that might make a government agency, manufacturer, or business–including eligible individual plants or subunits–take the time to apply? What does applying for the Baldrige Award have that all of the other awards do not?

I would posit that of all of the other management frameworks and awards out there, only the Baldrige Award uses a framework that looks for improvements across your entire enterprise–in other words, uses a systems perspective so that you are improving your whole organization, not just optimizing one area. And only applying for the Baldrige Award brings an organization unbiased feedback from a cross-sector team of experts from a leadership development program that has been ranked the best in the government and military category of the Leadership 500 excellence awards.

Another initiative, the new ISO 9001:2015 is considered “an international quality management system (QMS) standard,” writes Craig Cochran in ISO 9001:2015 in Plain English. “It presents fundamental management and quality assurance practices that can be applied by any organization.” The new iteration of ISO has moved even closer to what the Baldrige framework offers, with more of a focus on each organization’s unique issues, planning, environmental scanning, and change management. For example, ISO 9001:2015 adds organizational knowledge as a new requirement and has expanded the role of top management and process management.

However, “ISO is not intended to be an enterprise-wide performance improvement system,” said Dr. Joseph A. DeFeo, Chairman and CEO of Juran Global, during a recent webinar. ISO standards provide good quality control and quality assurance, but ISO 9001-2015 is still far away from looking at the whole enterprise. “Even the head of the ISO quality control technical committee will say that the ISO criteria are only about a quarter of what you need to do to make an enterprise successful,” he said.

In “Moving Beyond ISO 9001,” author Jerry Green writes, “It is the opinion of this author that ISO 9001: 2008 serves as a good foundation for a total quality organization. It requires that a healthy Quality Management System be in place and that core processes are standardized and followed. However, it does not require evidence of positive trends over time or a comparison of results to assess a company’s competitive position.” Category 7 of the Baldrige Excellence Framework has always focused on business results and strategy.

“ISO 9001 certification is gradually becoming a requirement for doing business in many industries, [however,] to remain competitive, organizations need to go beyond ISO 9001,” writes Green.

According to Jack West, lead U.S. delegate to the ISO Technical Committee ISO/TC 176, which is responsible for ISO 9000, “The new standard followed a process-based approach to quality management aligned more with the way a business is actually run.” This process-based approach is already paramount in the Baldrige Excellence Framework.

In a 2001 article after one of the last ISO revisions, Paul Scicchitano, executive editor of
Quality Systems Update, interviewed Baldrige Award recipients in “Winners
See Movement of New ISO 9001 to Baldrige.” Now retired, Vince Morgillo, director of quality at Dana’s Spicer Driveshaft Division, was quoted as saying, “The key reason we won the Baldrige is leadership and fact-based management. That’s what’s different, that’s what the Baldrige demands.” David Briggs of Baldrige Award recipient KARLEE agreed that the new standard “adheres more closely to the Baldrige Criteria,” particularly in measurement of customer satisfaction. Steve Wells, president of Baldrige Award recipient Los Alamos National Bank, said, “guiding quality efforts by the Baldrige Criteria seemed to be a way of incorporating all that ISO 9000 would accomplish but gave us a lot more feedback in terms of ways we could improve in the future.”

The Deming Prize offered by the Union of Japanese Scientists and Engineers is technical and encompasses a lot of diligence, but it’s not quite as robust across the system as Baldrige, said DeFeo. The Deming Prize came before the Baldrige Award, so many lessons learned were written into the Baldrige framework, he added.

The Shingo Prize and model with its Guiding Principles tends to be of interest mostly to manufacturers. Said DeFeo, “I like to tell people on your way to being excellent in your manufacturing company . . . win the Shingo prize first then go on to win Baldrige. There’s a pretty good chance it is a stepping stone.”

“People like Dr. Juran and Dr. Deming said very clearly it is criteria like [Baldrige, ISO, Shingo, etc.] that if spread among all of us will make society a better place, and if we keep forgetting that we’re going to keep falling on our laurels,” said DeFeo.

Dorothy: If we walk far enough, we shall sometime come to someplace.

But wouldn’t it be great if we had the Baldrige Criteria to guide our way?

Posted in Baldrige Award Process, Baldrige Award Recipients, Baldrige Criteria, Baldrige Examiners, Business, Customer Focus, Leadership, Manufacturing, Performance Results, Uncategorized | Leave a comment

Consider a Busy Restaurant Kitchen as a System

Posted by Harry Hertz, the Baldrige Cheermudgeon

I am frequently asked about the meaning of systems perspective or about the difference between aligned processes (alignment) and integrated processes (integration). I recently read an HBR blog post entitled “Optimizing each part of a firm doesn’t optimize the whole firm.” A key point was that improving each part of an enterprise does not necessarily lead chefsto improving the whole enterprise or to operational excellence. Several examples were given of failures and successes achieved by either looking at only the parts or at the whole enterprise, respectively. Looking at the optimization of individual parts led not just to sub-optimization, but frequently to overall system failures.

While not touched upon in the blog post, there was an accompanying picture of a large professional kitchen with many sous-chefs. I realized that here was an opportunity to describe the concepts of alignment, integration, and systems perspective.

Let’s consider the preparation of a set of meals for three diners at a table in the large restaurant served by this kitchen. Each sous chef upon arrival of an order could execute his or her piece of the dinner perfectly. They have optimized their piece of the meal. Unfortunately the hot fish appetizer for one of the guests may be available five minutes after the ice cream dessert which is either served first or sits melting away. This restaurant has a random collection of independently well-functioning processes. They will soon be out of business!

Next consider the aligned kitchen. The sous chef responsible for sauces begins her sauce when the fish is cooked, so that she can take the assembly line hand-off and prepare a hot sauce to go on top of the fish. She then sends it to the garnish chef who adds the finishing touches. Timing is exquisite. Everyone know when to start their process, immediately on arrival of the plate. Processes are aligned in sequence, but the guest receives a cold piece of fish because of the time lag since the fish was first put on the plate.

Now let’s consider that all three chefs know the fish preparation takes eight minutes, the sauce two minutes, and the garnish two minutes. The sauce sous chef begins her preparation six minutes after the fish chef so that the sauce is ready as the fish is put on the plate. The garnish sous chef begins his preparation seven minutes after the fish preparation begins, allowing one minute after the fish is done for plating and addition of the sauce. The result is an integrated appetizer preparation process with a total time lapse of a nine minutes and a happy diner! Or is she happy?

There has been no coordination of the fish preparation with the escargot appetizer preparation of her two table companions. The escargot takes fifteen minutes to prepare. So either the appetizers are served and eaten at different times or the fish sits and gets cold while waiting for the escargot. In a fully integrated appetizer section, the fish preparation would start six minutes after the escargot preparation begins so that all appetizers are completed and served hot at the same time.

But the diners may still be unhappy at the end of their meals. While they all received their appetizers simultaneously, their main courses simultaneously, and their desserts simultaneously, there was a 40 minute gap from the completion of their appetizers to the dinner service, and then only two minutes from completion of their main courses until arrival of desserts. Not particularly good pacing for our three guests!

Now, consider the ultimate dining experience. Not only are the three separate kitchen departments individually integrated, but the head chef, who has purview over the full kitchen, sequences the orders so that the gap between courses matches the desires of the diners at each table. A true systems perspective orchestrated at the enterprise level. I am getting hungry already!

 

 

Posted in Operations Focus | Tagged , , , | 6 Comments

Using Analytics to Improve Your Business

Posted by Dawn Marie Bailey

What benefit could come from organizations mastering the use of modern analytics, which is defined by James R. Evans as “the use of data, information technology, statistical analysis, quantitative methods, and mathematical or computer-based models to help managers gain improved insight about their business operations and make better, fact-based decisions”?24789463.thb

Marketers use analytics to track your product interests, sports teams use analytics to determine strategy and what ticket prices you’ll pay, and banks use analytics to predict and prevent credit fraud. But many organizations find themselves awash in data, including data coming from social media, and not able to effectively turn that data into something meaningful that they can use.

Two recent articles explore modern analytics and measurement and how the Baldrige Excellence Framework can help organizations make sense of data and prioritize which measurements to track.

In today’s fast-paced, “analytics-driven environment,” traditional management approaches are evolving, and “real-time data acquisition is becoming the norm,” writes Evans in “Modern Analytics and the Future of Quality and Performance Excellence,” a recent ASQ Quality Management Journal article.

Evans, a professor in the Department of Operations and Business Analytics in the College of Business at the University of Cincinnati, writes that the principles of analytics—”fact-based decisions as opposed to judgment and intuition, more prediction rather than reactive decisions, and the use of analytics by everyone at the point where decisions are made rather than relying on skilled experts”—have been reflected in the Baldrige Criteria for many years. The 2015–2016 Baldrige Excellence Framework notes the importance of data and analytics in the core value of management by fact and in its glossary definition of analysis. In addition, the Baldrige framework addresses “big data,” strategy considerations for data, performance projections, performance measures, and future performance.

“Various research studies have discovered strong relationships between a company’s performance in terms of profitability, revenue, and shareholder return and its use of analytics,” writes Evans. “Thus, one would surmise that analytics is an essential component of higher-scoring Baldrige applicants.”

Evans goes on to describe the effective use of data visualization (category 7 of the Baldrige Criteria), dashboards and scoreboards (used by many Baldrige recipients; see category 4 in the award application summaries of recipients), data mining (and its association with customer engagement; 3.2 of the Baldrige Criteria), and types of analysis.

In another recent article, this time from ASQ’s Quality Progress, “To Measure Is to Know, Susan Leister and Suzanne Tran echo the importance of data: “An organization that wants to be ‘in the know’ about its performance—as well as proactive in process improvement—should develop, implement, and maintain a measurement and analysis program.”

Such a program may be influenced by category 4, Measurement, Analysis, and Knowledge Management, of the Baldrige Criteria, they write. “The category asks how your organization selects, gathers, analyzes, manages, and improves its data, information, and knowledge assets; how it learns; and how it manages information technology,” the Criteria reads. “The category also asks how your organization uses review findings to improve its performance.”

One benefit of a measurement and analysis program, write Leister and  Tran, is that it can provide management with a basis for factual decision making, which can provide an organization with an understanding of the value it is creating. “A well-crafted metrics program can help an organization make effective decisions and take appropriate actions,” they write, and “remember: What gets measured usually gets fixed.”

After implementation of a measurement and analysis program, Leister and Tran suggest organizations consider the questions in Are We Making Progress? and/or Are We Making Progress as Leaders?, free Baldrige downloadable tools, to assess their progress.

How could your organization use the Baldrige Criteria as a framework for or an assessment of analytics?

Posted in Baldrige Award Recipients, Baldrige Criteria, Business, Measurement, Analysis, and Knowledge Management, Performance Results, Uncategorized | 1 Comment

Another Reason Health Care Organizations Need the Baldrige Framework

By Christine Schaefer

A panel of patient safety experts recently found that a “systems approach” is necessary to ensure patient safety in hospitals and other health care organizations. An article published late last year in the industry newsletter FierceHealthcare summarized findings of a new report from the National Patient Safety Foundation (NPSF). The December 2015 report, follow-up to the NPSF’s groundbreaking 1999 report “To Err is Human: Building a Safer Health System,” publishes findings of an expert panel on patient safety convened by NPSF early in 2015 and co-led by Dr. Donald Berwick, president emeritus and senior fellow at the Institute for Healthcare Improvement.

The panel’s charge was reportedly to “assess the state of the patient safety field and set the stage for the next 15 years of work.” Summarizing the findings, FierceHealthcare Executive Editor Ilene MacDonald writes that the new NPSF report finds necessary “a total system approach and a culture of safety” to combat medical errors and adverse events.

A total system approach. Surely that resonates with those of you who are already adherents of the Baldrige Excellence Framework (which includes the Health Care Criteria for Performance Excellence).

Systems perspective is the first of 11 core values and concepts described in the Baldrige Program’s 2015–2016 Health Care Criteria for Performance Excellence. Those core values and concepts serve as the “foundation for integrating key performance and operational requirements within a results-oriented framework that creates a basis for action, feedback, and ongoing success” (page 39). The Baldrige framework’s other 11 foundational and interrelated core values and concepts are visionary leadership, patient-focused excellence, valuing people, organizational learning and agility, focus on success, managing for innovation, management by fact, societal responsibility and community health, ethics and transparency, and delivering value and results.

The Baldrige Performance Excellence Program, author and publisher of the 2015–2016 Baldrige Excellence Framework (health care version)—as well as the next revision that will be issued early in 2017—defines systems perspective as “managing all the components of your organization as a unified whole to achieve your mission, ongoing success, and performance excellence.” According to the full definition in the booklet’s glossary, “Successfully managing overall organizational performance requires realization of your organization as a system with interdependent operations. Organization-specific synthesis, alignment, and integration make the system successful.”

As described further in the Baldrige framework booklet, when a health care organization takes a systems perspective, its senior leaders focus on strategic directions and on patients and other customers. They monitor, respond to, and manage performance based on the organization’s results. With a systems perspective in place, a health care organization uses its measures, indicators, core competencies, and organizational knowledge to build its key strategies, link these strategies with its work systems and key processes, and align its resources to improve the organization’s overall performance and its focus on patients, other customers, and stakeholders.2015_2016_Baldrige Health Care_Role_of_Core_Values

So health care organizations that have adopted the Baldrige Excellence Framework to manage their performance in and across all areas already have “a total system approach” in place. Baldrige organizations are thus in optimal position to achieve good and ever-improving patient safety results.

How is your health care organization improving patient safety?

Posted in Baldrige Criteria, Health Care, Uncategorized | Tagged , , | 4 Comments

Where to Find Guidance to Gain a Competitive Advantage

Posted by Dawn Marie Bailey

Not too long ago, Industry Week hosted a webinar “Five Characteristics for Competitive IndustryWeekAdvantage: What Discrete Manufacturers Need to Grow and Flourish,” and those five characteristics just happen to line up with the management practices found in the Baldrige Excellence Framework.

With today’s business challenges of demanding customers, new competitors, price pressures, staffing/skilled workers, keeping costs in control, and improving productivity, webinar presenter Julie Fraser, principal and president of Iyno Advisers, Inc., says there are five characteristics that companies, and especially manufacturers, need to embrace in order to grow and flourish.

These characteristics and how to address them are already considerations in the Baldrige framework and its Criteria, which have been described as a roadmap to organizational excellence. Each characteristic also happens to be highlighted as part of a Baldrige core value and concept, which are described as “the foundation for integrating key performance and operational requirements within a results-oriented framework that creates a basis for action, feedback, and ongoing success.”

For example, following are the characteristics that Fraser says successful organizations need today. Below each characteristic is how and where the Baldrige Criteria provide considerations to guide an organization to success.

  • Be agile and ready to change.
    The Baldrige core value “organizational learning and agility” defines agility as the capacity for rapid change and flexibility in operations. How to be agile and ready to change, including from leadership’s perspective, is specifically addressed in the following areas of the Baldrige Criteria: 1.1 Senior Leadership; 2.1 Strategy Development; 4.1 Measurement, Analysis, and Improvement of Organizational Performance; and 6.1 Work Processes.
  • Be attractive to millennials and talented employees.
    “Valuing people” is a Baldrige core value that includes committing to employees’, and potential employees’, engagement, development, and well-being. Hiring practices, especially to attract a workforce that represents the diverse ideas, cultures, and thinking of the customer community and the next generation, are called out in the Baldrige Criteria in 5.1 Workforce Environment and 2.2 Strategy Implementation (in regards to workforce plans to support capability and capacity). Retaining talented employees is addressed in relation to leadership development and career progression (1.2 Governance and Societal Responsibilities and 5.2 Workforce Engagement).
  • Be innovative, and not only with products.
    In the Baldrige framework, innovation means making meaningful change to improve your organization’s products, services, programs, processes, operations, and business model, with the purpose of creating new value for stakeholders. Considerations for how to be innovative and “manage for innovation” (a Baldrige core value) appear throughout the Criteria but most specifically in 1.1 Senior Leadership; 2.1 Strategy Development; 4.1 Measurement, Analysis, and Improvement of Organizational Performance; 4.2 Knowledge Management, Information, and Information Technology; 5.2 Workforce Engagement; and 6.1 Work Processes.
  • Be aligned from strategy to tactics to operations.
    Alignment—a state of consistency among plans, processes, information, resource decisions, workforce capability and capacity, actions, results, and analyses that support key organization-wide goals—is what the Baldrige framework is all about. The framework offers a systems perspective, which means managing all the components of an organization as a unified whole to achieve ongoing success; “systems perspective” is also a Baldrige core value. How to be aligned is addressed in the Baldrige Criteria in 2.2 Strategy Implementation; 4.1 Measurement, Analysis, and Improvement of Organizational Performance; and 5 Workforce.
  • Be alert and instantly aware, to get the most out of resources.
    To be alert and aware, you need the facts (measurements), and “management by fact,” a Baldrige core value, means measuring and analyzing your organization’s performance. Measurements derive from business needs and strategy and provide critical data and information about key processes, outputs, results, outcomes, and competitor and industry performance. How to be alert and instantly aware is addressed throughout the Criteria, but specifically in 1.1 Senior Leadership; 2.1 Strategy Development; 2.2 Strategy Implementation (including considerations for modifying action plans if circumstances require a shift in plans and rapid execution of new plans); 3.1 Voice of the Customer; 4.1 Measurement, Analysis, and Improvement of Organizational Performance; 4.2 Knowledge Management, Information, and Information Technology; and 6.2 Operational Effectiveness.

In addition to the guidance found in the Baldrige Criteria, the Baldrige process also brings benefits to organizations by helping them focus limited resources on what is really important. Self-assessments and tools, such as Baldrige Excellence Builder and Are We Making Progress?, can help an organization draw attention to where to begin and where process and results need to be optimized. And feedback reports, which are received with every Baldrige Award application, outline what the Baldrige examiners feel are the organization’s greatest strengths to leverage and greatest vulnerabilities to immediately address. The examiners may also use bold lettering to point out areas where they feel the organization should pay particular attention. Other strengths and opportunity comments in feedback reports are put into priority order for the organization’s consideration.

The five characteristics of competitive advantage, plus lots of guidance for prioritizing resources, already exist in the Baldrige framework. All it takes is organizations—and especially manufacturers who may have an outdated perception of Baldrige—to rediscover them.

Posted in Baldrige Award Process, Baldrige Criteria, Business, Leadership, Manufacturing, Measurement, Analysis, and Knowledge Management, Operations Focus, Uncategorized | 1 Comment