A Guide for When to Embrace Risk for Value

Posted by Dawn Marie Bailey

109224131.thmShould an organization embrace risk or spend millions of dollars a year to avoid it? How do you know when which strategy is best?

Considerations for such thinking are covered in the Baldrige Excellence Framework, and the topic was recently explored by Brennan McEachran in an Innovation Excellence article entitled “How to Embrace Risk to Create Value.”

“When risk is positioned in a positive light, it’s easier to develop a greater tolerance for it,” writes McEachran. “Many large well-known brands . . . are embracing the right kinds of risk to engage their employees on how to innovate some of their most important business priorities.”

McEachran prescribes strategies for how to handle risk, for example, “focus on incremental not radical innovation.” He writes, “The reasons why incremental innovation is generally more successful than radical innovation is because the latter takes much longer to implement, uses more resources, and carries greater risk. On the other hand, small ideas can be turned around quicker and executed in less time, so benefits are realized sooner. Incremental innovation also provides a more sustainable competitive advantage.”

McEachran also advises to “focus on areas where you need to take more risks . . . [but] don’t try to innovate in all areas . . . focus your experimentation.” Piloting an innovation so that you can acquire real data and asking your community for feedback and collaboration also are suggested paths to embrace risk.

But how do you answer the where, when, and what for turning strategies to embrace or avoid risk into action? A roadmap customized for your organization may exist in the Baldrige framework itself.

In the Baldrige Excellence Framework, intelligent risk is defined as “opportunities for which the potential gain outweighs the potential harm or loss to your organization’s future success if you do not explore them.”

Considerations for intelligent risk and innovation can be found all through the Baldrige framework, for example,

  • Within 1.1 Senior Leadership, in regards to creating an environment for intelligent risk taking and a focus on action
  • Within 2.1 Strategy Development, in regards to deciding which strategic opportunities are intelligent risks for pursuing
  • Within 5.2 Workforce Engagement, in regards to how your workforce performance management system reinforces intelligent risk to achieve innovation
  • Within 6.1 Work Processes, in regards to how you pursue strategic opportunities that you determine are intelligent risks

A great source of examples comes from Baldrige Award recipient application summaries in which role-model organizations answer the considerations above in terms of what was important to their businesses and services. How did these national role models embrace risk for value and know what, when, and where to do it?

According to McEachran, embracing risk is sometimes a choice organizations need to make: “You won’t achieve double digit growth without taking risks.”

And the Baldrige Award recipients can certainly claim growth and mastery within their industries from knowing how, when, where, and what to act on when it comes to embracing risk for value.

Posted in Baldrige Award Recipients, Baldrige Criteria, Business, Leadership, Performance Results | 1 Comment

A School Board Improves Its Focus Using the Baldrige Framework

By Christine Schaefer

This past Saturday (September 24, 2016) was a proud day for Greg Gibson, a member of the Judges Panel for the Malcolm Baldrige National Quality Award. As superintendent of Schertz-Cibolo-Universal City Independent School District (ISD) in Texas, Gibson was delighted to see his district’s board of trustees publicly recognized for its performance at the annual convention of the Texas Association of School Administrators (TASA).

Specifically, the board of trustees for Schertz-Cibolo-Universal City ISD is one of five (among school boards for about 1,100 public school districts across Texas) named a “2016 Texas Honor School Board” by TASA. Selection criteria for the annual award include “support for educational performance, support for educational improvement projects, commitment to a code of ethics, and maintenance of harmonious and supportive relationships among board members,” according to the TASA website.

photo of school board

Schertz-Cibolo-Universal City ISD Board Members:
Front row, from left to right: Mr. John Correu, Trustee; Mr. Robert Westbrook, Vice President; Mrs. Amy Driesbach, Trustee; and Mr. Jerry Perkins, Asst. Secretary.
Back row, left to right: Dr. Greg Gibson, Secretary of Schools; Mr. Mark Wilson, Trustee; Mr. Gary Inmon, President; and Mr. David Pevoto, Secretary.

Describing his board’s recent achievement, Gibson explained, “Starting about five years ago, we took the bold step of wiping our slate clean of our previous agenda in order to focus our actions at board meetings on student achievement and staff satisfaction and engagement. Previously, we had wasted too much time at meetings on other issues.”

He added, “We started with the definition of governance in glossary found in the back of the Baldrige Excellence Framework booklet (which includes the Education Criteria for Performance Excellence). The definition, which reflects the systems perspective that is a core concept of the Baldrige framework, begins as follows:

the system of management and controls exercised in the stewardship of your organization…

“We built on that definition and the Baldrige Criteria concepts in item 1.2 [the section on an organization’s governance system],” explained Gibson.

To improve its focus on the school district’s true priorities during board meetings, Gibson said, the seven board members and school system leader initially worked on improving the governance board’s performance in relation to 29 indicators of excellence from a longstanding state self-assessment tool.

“Once we maxed that out, we looked to continuously improve by moving to the Baldrige Criteria,” said Gibson. “The new self-analysis we built—it’s an inventory for good governance—is based directly on the Baldrige Excellence Framework. We’ll start using it in the next school year.”

For the statewide award received by his board last weekend, Gibson noted, “We wrote our application around the work our trustees are doing with the Baldrige framework.”

Congratulations to the board of trustees for Schertz-Cibolo-Universal City ISD—and kudos to all boards of directors that similarly are using or plan to use the Baldrige framework to achieve and sustain good governance!

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Will Social Technologies Drive Business Model Innovation?

Posted by Harry Hertz, the Baldrige Cheermudgeon

I recently read a McKinsey article on the evolution of social technology use by companies. The article was based on surveys of 2700 global executives spanning the years 2005 to social media22015. The results indicated that leading companies have passed through three distinct phases of social technology use:

  1. Tryouts — Companies testing social media as a way to communicate information, such as marketing messages
  2. Collaboration and knowledge work — Companies establishing internal knowledge sharing and collaboration platforms to connect employees and ideas
  3.  Strategic insights — Companies establishing internal and external networks for encouraging stakeholders broadly to contribute to idea development; on a strategic and operational level, the extreme use of this technology is crowdsourcing.

Going forward, the use of social media could have numerous implications for not only how strategy is developed, but also for organizational business models . Different organizations will choose different paths, but change (as always) will be inevitable. Here are some scenarios to ponder:

  1. Organizational flattening — With direct communication via social media from the top of the organization to the front-line employee and beyond, will new informal networks replace or subvert more formalized structures for communication and lead to a reduction in managerial levels? Will decision-making processes become more distributed and less formal? Will formal processes for decision-making at the strategic level rely on networks and councils for input?
  2. Death or failure of hierarchical organizations — Will the existence of informal networks and the needed speed of information flow lead to the inability of strictly hierarchical organizations to keep pace? Will such organizations need to rethink their organizational structure and decision-making processes? Will those that do not change voluntarily die because of a lack of competitiveness in a rapidly changing landscape?
  3. Increase in risk-averse organizations — Will the ability to crowdsource and survey large groups of customers lead to a lack of investment in bold ideas, because the ideas are ahead of the customers’ ability to imagine or sense a future need? Will breakthrough products and technologies become even more the domain of start-ups? Will the business model for large organizations become largely focused on acquisitions of small entrepreneurial firms and less on internal R&D?
  4. Strategic alliances — Will the use of external networks in strategy development lead to more partnerships that share risk in strategy execution, new product development, or new market entry? Will the ability to create private networks encourage the seeking of partnerships and alliances before detailed strategy development begins?
  5. Rethinking the role of intellectual property — Will the more open nature of strategy input and development change our thinking about protecting intellectual property? Will there be less focus on proprietary information? Will true competitive advantage no longer come from the protection of intellectual property but from the ability to execute and make use of intellectual property?

These are just some of the potential impacts of social media on business models. The real question today is whether your organization is considering the role of social media strategically, as a source of not only information but as a disrupter of your current business model? Where is your organization headed?

Posted in Business, Leadership, Measurement, Analysis, and Knowledge Management, Operations Focus, Uncategorized | Tagged , , | 1 Comment

Baldrige Cyber—A New Era in the Baldrige Program Begins!

Baldrige-Cyber“Our goal is to empower [organizations] of every size and every sector with the right tools to secure themselves in a [cyber] threat landscape that is ever-evolving. Static, checklist-style compliance just won’t do. In business and in government, we all must move towards dynamic, accountable approaches to cyber risk management.”

With those words, Deputy Secretary of Commerce Bruce Andrews announced the release of the Baldrige Cybersecurity Excellence Builder, a new self-assessment tool that integrates organizational assessment approaches from the Baldrige Performance Excellence Program with the concepts and principles of the Cybersecurity Framework developed by NIST’s Applied Cybersecurity Division. The purpose of the tool is to help organizations better understand the effectiveness of their cybersecurity risk management efforts and to identify improvement opportunities in the context of their overall organizational performance.

For nearly 30 years, the Baldrige Program has been helping to ensure the long-term success and sustainability of businesses and other organizations in the United States by providing a globally recognized and emulated standard of organization-wide excellence (the Baldrige Excellence Framework), organizational assessments and tools, and the sharing of best practices of role-model organizations recognized through the Malcolm Baldrige National Quality Award.

The Baldrige Program initially helped to address the quality crisis of the eighties. As the drivers of competitiveness and long-term success evolved, so too did the Baldrige framework. Today we offer organizations of all kinds a nonprescriptive leadership and management guide that facilitates a systems approach to achieving organization-wide excellence. In recent years, Baldrige has been a powerful agent of change and improvement in all sectors, most notably health care, and now we have the opportunity to help address another national crisis, cybersecurity.

It has been said that every organization falls into one of two categories: those that have suffered a cyber-attack and know it, and those that have been attacked and don’t know it. While that may be a slight exaggeration, considering there were an estimated 300 million cyber-attacks in 2015—only 90 million of which were detected—and an annual growth rate of approximately 40% in such attacks, it is pretty safe to assume that if you haven’t been attacked, you probably will be soon. As the drumbeat of daily news stories reminds us, protecting data, information, and systems has become a more urgent necessity for just about every organization.

The Cybersecurity Framework provides organization and structure to today’s multiple approaches to managing cybersecurity risk by assembling standards, guidelines, and practices that are working effectively in many organizations. With the Baldrige approach as applied to cybersecurity, an organization manages all areas affected by cybersecurity as a unified whole. In addition, the Baldrige Cybersecurity Excellence Builder, developed in partnership with the Applied Cybersecurity Division and cross-sector industry representatives, enables an assessment of the maturity of an organization’s approaches to cybersecurity and the results achieved. The assessment rubric guides users to determine the maturity level of their cybersecurity programs, processes, and systems—classified as “reactive,” “early,” “mature,” or “role model.” The completed evaluation should lead to action plans to improve cybersecurity practices and management.

Like the Cybersecurity Framework and the Baldrige Excellence Framework, the Baldrige Cybersecurity Excellence Builder is not a one-size-fits-all approach to managing cybersecurity risk. It is adaptable to your organization’s needs, goals, capabilities, constraints, and environment.

Also, like both the Cybersecurity Framework and the Baldrige Excellence Framework, the Baldrige Cybersecurity Excellence Builder will rely heavily on public input. We invite interested users to visit our program’s website, download a copy of the draft Baldrige Cybersecurity Excellence Builder, and let us know what you think (there are instructions on how to provide feedback on the website and on the cover of the tool). Your input will be considered when it is updated and released as version 1 in Spring 2017.

Depending on industry interest and support, the next steps will be to add voluntary assessments, voluntary recognition, and/or voluntary best-practice sharing to help spread the use of the Cybersecurity Framework, the self-assessment tool, and of course, improve organizational and national cybersecurity preparedness.

Baldrige has become a catalyst for transforming organizations, and if the goals of this self-assessment tool are met, it will serve as a valuable instrument in helping organizations to better understand the robustness and effectiveness of their cybersecurity programs and practices. It also will help them in assessing how effectively those efforts align with and support larger organizational requirements, goals, objectives, and strategy.

We are excited to have the opportunity to be a part of a comprehensive initiative to help strengthen the nation’s cybersecurity infrastructure. Please join us by trying out the assessment yourself.

Photo credits: ©Titima Ongkantong/Shutterstock, ©alexmillos/Shutterstock

Posted in Baldrige Director, Baldrige Events, Baldrige News, Business, Leadership, Performance Results | 1 Comment

Bringing a Systems Approach to U.S. Population Health

By Christine Schaefer

“Our proposed framework would improve how we monitor and manage health for the U.S. population. Essentially, it translates the Baldrige framework to address U.S. population health.”
                                                                    —Julie Kapp

Every year a new cohort of Baldrige Executive Fellows gains intensive knowledge about leading organizations to excellence through cross-sector, peer-to-peer learning hosted at the sites of Baldrige Award recipients. Every Baldrige Fellow completes a capstone project as part of the executive leadership program.

A paper on the capstone project of Julie M. Kapp, MPH, PhD, a 2014 Baldrige Fellow, is being published this month in Systems Research and Behavioral Science (see hyperlink below). Kapp is an associate professor in the Department of Health Management and Informatics at the University of Missouri School of Medicine in Columbia, MO.

Following is an interview of Kapp about the publication of the Baldrige-based approach to U.S. population health.

Julie Kapp

Julie Kapp

 

What inspired your capstone project?

This publication A Conceptual Framework for a Systems-Thinking Approach to U.S. Population Health was inspired by the work I have done up to this point in my career within the health care sector, as well as within the education sector and with community-based organizations.

In my past role as the executive director of the Partnership for Evaluation, Assessment, and Research at the University of Missouri in St. Louis, I met with dozens of community-based organizations that were putting their passions to work for the greater good of the St. Louis area. At that time, within the St. Louis area, 4,076 organizations were registered with the Internal Revenue Service as tax-deductible charitable organizations. Those organizations span sectors and multiple programmatic areas, such as education, public health, crime prevention, mental health, and community development. Many work with area school districts or to improve economic stability.

Despite the vast number of organizations actively focused on such issues in and around struggling areas of St. Louis, much work needs to be done to strengthen their capacity, readiness, and use of strong evaluation planning and evidence-based decision making to ensure effective results for the betterment of the region.

This challenge isn’t specific to St. Louis, and a movement around the country encourages a collective impact approach. This has been defined as the commitment of cross-sector organizations toward a common goal, with five conditions for success identified as (1) a common agenda; (2) a backbone support organization; (3) mutually reinforcing activities; (4) shared measurement systems; and (5) continuous communication (see J. Kania and M. Kramer, Stanford Social Innovation Review, 2011).

The more deeply I became involved—and after I transitioned to my current role at the School of Medicine at the University of Missouri in Columbia—the more I came to believe that the five conditions listed above for collective impact are not enough. To improve the effectiveness of how community-focused organizations address health and other issues, we must change their funding requirements. To change their funding requirements on a broad scale requires change at the federal level. Therefore, what is required is a systems approach. This is a key way in which my proposed framework reflects the Baldrige Excellence Framework.

 

What were the milestones of your project? Did you receive any key feedback from sharing your capstone progress with other Baldrige Fellows?

The entire experience was exceptionally beneficial. The chemistry and collegiality among our cohort of Baldrige Fellows elevated the experience even further. I learned so much from each of them, and from the leadership—Bob Fangmeyer [Baldrige director], Harry Hertz [Baldrige director emeritus], Bob Barnett [Baldrige Fellows executive in residence], and Pat Hilton [Baldrige Fellows program manager].

Dr. Steven Kravet, president of Johns Hopkins Community Physicians, co-authored the paper, contributing his physician’s perspective as well as his perspective as another Baldrige Fellow.

 

What is your vision for how this capstone project is improving/has improved something significant at your organization? Could you please describe any results or impacts so far?

Our proposed framework would improve how we monitor and manage health for the U.S. population. Essentially, it translates the Baldrige framework to address U.S. population health, with two overarching recommendations: (1) drive a strategic outcomes-oriented, rather than action-oriented, approach by creating an evidence-based, national reporting dashboard; and (2) improve the operational effectiveness of the workforce.

The current infrastructure is fragmented and misaligned. A 2013 National Research Council and Institute of Medicine report identifies how the United States has for decades lagged behind our high-income peer countries on a number of health indicators, including life expectancy. To reduce this U.S. health disadvantage through system-level change, we must begin to align and integrate and be able to visually display health and health care organizations’ shared metrics; allocated dollars on shared metrics; programs and activities on shared metrics; progress reports on shared metrics; and evidence-based and effective practices on shared metrics.

With the publication of this framework, I hope to distribute it to as many key stakeholders that impact U.S. health as possible, including researchers, leaders of federal agencies, national organizations, and legislators. It is relevant to the secretary of the U.S. Department of Health and Human Services; Agency for Healthcare Research & Quality; Centers for Disease Control and Prevention; National Research Council; U.S. Surgeon General; AcademyHealth; National Academies of Sciences, Engineering, and Medicine; Centers for Medicare and Medicaid Services Innovation Center; state government organizations; and nonprofit organizations and foundations, among others. Next steps include beginning to operationalize the framework at the local, state, and federal levels.

We can’t afford not to consider an aligned and integrated systems-thinking perspective for improving U.S. population health.

 

What were your key learnings from the Baldrige Fellows program?

Baldrige opened my eyes to alignment and integration, a systems approach, and feedback loops. Those concepts were apparent during our group’s visit to Advocate Good Samaritan Hospital in Downers Grove, Illinois [a 2010 Baldrige Award recipient]. It was so helpful to see what excellence looks like in operation. Good Samaritan Hospital also really brought home the message for me that having the right leadership is everything.

The ideas that are part of the Baldrige framework are really helpful. But the real learning and growing comes when you have to do the hard work of answering the questions in addressing your particular challenge.

 

Could you please share a few insights you gained from delving into the Baldrige framework during the Baldrige Fellows sessions that you can use for the benefit of your own organization?

Yes. First, make sure you have a clear vision and can communicate it. The “why” is our reason for being. It motivates us each day.

Second, the difference between success and failure is in the “how.”

Third, being transparent in sharing data and action plans and progress on metrics goes a long way to build trust in an organization’s leadership and confidence in a process.

Finally, stay the course. Don’t lose faith.

 

Could you please describe the value/benefits you see of the Baldrige framework to your sector?

Health care organizations are familiar with the Baldrige framework [which includes the Health Care Criteria for Performance Excellence], but it is not used widely enough. And as of now, the discipline and implementation of approaches to U.S. population health are not reflecting the Baldrige framework. I hope our paper provides those involved with U.S. population health a framework to use to move forward.

With the 2010 Patient Protection and Affordable Care Act initiatives, the country is moving in the direction of integrating these two sectors, which is extremely challenging to do without an overarching framework. I have not yet seen anyone else [but the Baldrige Program] provide such an applied, operational framework that essentially addresses the how, the process.

 

More interviews of Baldrige Fellows and information on this executive leadership program is available on the Baldrige Program’s website.

 

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