Pursuing Performance Excellence Using the Baldrige CriteriaWashington DC & Maryland Metro SectionASQRobert J. ScanlonMay 17, 2007

Pursuing Performance Excellence- AgendaThe Search for CompetitivenessUnderstanding Systems The Power of a StandardThe Baldrige National Quality ProgramSummary

Pursuing Performance Excellence- The Search for Quality CompetitivenessMy personal Quality journeyEarly 70s: Little qCaterpillar Metallurgical Laboratory

Focus: Quality Control

Pursuing Performance Excellence- The Search for Quality CompetitivenessMy personal Quality journeyEarly 80s: Big QQuality becomes a strategic priority

Focus changes to: Quality Improvement

Pursuing Performance Excellence- The Search for CompetitivenessThe broader context:The US has suddenly found itself to be non-competitive in Quality of manufactured productsThe alarm bells are sounding and everyone is scrambling to respond successfully to the threat

But HOW should we respond?

Pursuing Performance Excellence- Qualitys Contribution The Gurus:Crosby: Marketer - Quality is Free, Quality = Conformance to Requirements, Cost of Non-Conformance

Deming: Philosopher - SPC, 14 Points

Juran: Management Consultant - Quality = Fitness for Use, Quality Trilogy, Cost of Poor Quality, Resistance to Change

Fiegenbaum: Total Quality Control

Pursuing Performance Excellence- The Search for CompetitivenessMid 80s:Manufacturing organizations are picking one of the gurus to followThere is a frantic hunt for the secret to Japanese successBut, there is no consensus on what to do or whether the approaches being tried will work. So, no consensus...no standard

Pursuing Performance Excellence- The Search for CompetitivenessVisits to Japan identify pieces of a response:Statistical Process ControlEmployee Involvement (Quality Circles)Quality TrainingQuality Improvement TeamsWorkers who can stop the lineKanbanetc., etc., etc..

Pursuing Performance Excellence- The Search for CompetitivenessAll of these elements had some value. But, at best, they were

Necessary but InsufficientTo Assure the Success of the Enterprise

How do we know when weve got all of the right pieces assembled?

Pursuing Performance Excellence- The Search for Competitiveness

Q: The right pieces to what?

Pursuing Performance Excellence- The Search for Competitiveness

Ans.: The right pieces to ...

The Management System.

Pursuing Performance Excellence

Systems Thinking

Excerpts from a talk by Dr. Russell L. AckoffChairman and Professor Emeritus, the Wharton School

Pursuing Performance Excellence- Defining a System A System is: a whole consisting of two or more essential partsand for which the parts must satisfy 3 conditions:each part can affect the entire systems behavior or propertiesthe way each part affects the whole depends on what at least one other part is doing (i.e., no part of the system has an independent effect on the whole because they interact), andthe same applies to all subparts of all subsystems

Pursuing Performance Excellence- Systems ThinkingIndependence and Interaction: Because the properties of any system arise out of the interactions of its parts, the essential properties of any system, the properties that define the system, are properties of the whole that none of its parts have!Examples:

Pursuing Performance Excellence- Systems ThinkingThe Significance of Systems Interaction:

When you improve the performance of every part of the system taken separately, you do NOT (necessarily) improve the performance of the System.

Pursuing Performance Excellence- Systems ThinkingSystem & Element Design:

We should not attempt to improve any part of the Management System without understanding its role within the larger system.Instead, we must approach this from the perspective of knowing what properties we want the entire System to have and then designing each element to support that.

Pursuing Performance Excellence- Systems Thinking Reasons for TQM Failures:

Ignoring the total System

Focusing on fixing whats wrong instead of doing the right things

Pursuing Performance Excellence

The Power of Standards

Standards and Quality

In the absence of standards, Quality is a meaningless concept.

Types of StandardsGovernmentCommercial/IndustrialBusinessCompany Others

Characteristics of Standards Standards represent who we are and what we can do!They... should be attainable by everyone operating the process they apply to.require methods and measurement systems liberate us to focus our energy and creativity on other things.are a floor not a ceiling with respect to performance.require energy to maintain them.are dynamic and should improve over time.

Pursuing Performance Excellence- The Power of StandardsStandards: Confining or Liberating?

Examples:The Dishwasher StoryVHS or Beta? Do you feel lucky?PCsCell phones

Pursuing Performance Excellence- The Power of Standards

Conclusion: The emergence of a clear standard in a free enterprise system eliminates confusion and fuels economic growth.

Pursuing Performance Excellence- The Power of StandardsBut can Standards be Confining? Standards are confining when they are not updated and no longer represent the capability of a well managed / operated process.

Does this happen?

Pursuing Performance Excellence- The Power of StandardsBut can Standards be Confining? YesStandards are confining when they are not updated and no longer represent the capability of a well managed / operated process.

Does this happen?All the time!

Pursuing Performance Excellence- The Power of Standards

Conclusion: Improved competitiveness requires continuous process improvements which in turn drive improved standards. Standards should be dynamic, not static.

Pursuing Performance Excellence

The Baldrige Management System Model

Pursuing Performance Excellence- The Malcolm Baldrige National Quality Award From 1987 - 2006:68 Winners of the AwardWinners have shared their experience and lessons learned with tens of thousands to help them improve Millions of copies of criteria distributed42 states have Quality Awards using CriteriaInspired the European Quality AwardBeing adopted by other countries including the Japanese and ChineseBegan with Manufacturing, Service, an Small Business in 1987Expanded to Education and Healthcare in 1998 and the not for profit sector in 2006

Malcolm BaldrigeNational Quality Award

Criteria for Performance ExcellenceBaldrige National Quality Program

Seven Categories of the Business/Nonprofit CriteriaLeadershipStrategic PlanningCustomer and Market FocusMeasurement, Analysis, and Knowledge ManagementWorkforce FocusProcess ManagementResults

Core Values and ConceptsVisionary LeadershipCustomer-Driven ExcellenceOrganizational and Personal LearningValuing Employees and PartnersAgilityFocus on the FutureManaging for InnovationManagement by FactSocial ResponsibilityFocus on Results and Creating ValueSystems Perspective

Baldrige Criteria Framework: A Systems Perspective

Organizational ProfileP.1 Organizational DescriptionP.2 Organizational Challenges

Starting point for self-assessment and application preparationBasis for early action planning

Category Point Values1Leadership 1202Strategic Planning 853Customer and Market Focus 854Measurement, Analysis, and Knowledge Management 905Workforce Focus 856Process Management 857Results450TOTAL POINTS 1,000

Keeping the Criteria CurrentChanges in the 2007 Criteria (Handout)

Pursuing Performance Excellence

The Baldrige Quality Program represents a national management system standard that enables the systematic and effective pursuit of Performance Excellence

Pursuing Performance Excellence- Why Baldrige?

Its efficient: The Management System elements have been determined for you

A Standard minimizes the tendency for consultants to create their own competing approach

The common framework facilitates understanding, and sharing

Pursuing Performance Excellence- Why Baldrige (continued) ?An extensive infrastructure is in place to support you: Baldrige Foundation, Examiners, State Awards, the WinnersIt is constantly evaluated and improvedIt is not prescriptive - every organization has complete freedom to design its own approachesIt works!

Pursuing Performance Excellence- SummaryThe Baldrige National Quality Program Criteria:Is the culmination of the quality journey that began in the late 70s and continued through the 80sIs a national management system standard Incorporate the management system attributes that enable superior resultsIs applicable and available to any organization Provides complete freedom to develop the approaches an organization needs to support its goals and objectivesIs designed to systematically and successfully pursue Performance Excellence

Resources for More InformationMost Baldrige National Quality Program (BNQP) documents are available both in hard copy and on the BNQP Web site.

To obtain these documents, call (301) 975-2036 or visit www.baldrige.nist.gov.

The Criteria consist of these seven Categories. Each Category is subdivided into Items and Areas to Address. There are 18 Items, each focusing on a major requirement. Embodied within these is a set of Core Values and Concepts.Lets take a look at these Core Values and Concepts before discussing the Categories and Items and the related Areas to Address.The Criteria are built on a number of interrelated Core Values and Concepts.Visionary Leadership: An organizations senior leaders have a central role in setting directions and creating a customer focus. They must convey clear and visible values and high expectations. The organizations values and strategies should help guide all of its activities and decisions. Senior leaders serve as role models and reinforce ethics, values, and expectations while building leadership, commitment, and initiative throughout the organization. Senior leaders should be responsible to the organizations governance body for their actions and performance. Customer-Driven Excellence: Performance and quality are judged by an organizations customers. Thus, your organization must take into account all product and service features and characteristics and all modes of customer access that contribute value for your customers and lead to customer acquisition, satisfaction, preference, referrals, retention, and loyalty and to business expansion. Customer-driven excellence has both current and future components. It demands awareness of developments in technology and competitors offerings, as well as rapid and flexible responses to customer and market changes.Organizational and Personal Learning: Organizational learning refers to continuous improvement of existing approaches and significant change, leading to new goals and approaches. Personal learning refers to education, training, and other opportunities for continuous growth. Learning is directed not only toward developing better products and services but also toward being more responsive, adaptive, innovative, and efficientgiving your organization marketplace sustainability and performance advantages. The framework provides a high-level overview of the Baldrige Criteria for Performance Excellence and illustrates how the Criteria provide a systems perspective for managing your organization to achieve performance excellence. From top to bottom, the framework has three basic elementsthe Organizational Profile, the system operations, and the system foundation (Measurement, Analysis, and Knowledge Management).The Organizational Profile (the umbrella at the top of the figure) sets the context for the way your organization operates. Your environment, key working relationships, and strategic challenges and advantages serve as an overarching guide for your organizational performance management system. The system operations (middle of the figure) comprise two linked triads.The leadership triadLeadership, Strategic Planning, and Customer and Market Focusemphasizes the importance of a leadership focus on strategy and customers.

The results triadWorkforce Focus, Process Management, and Resultsfocuses on your workforce and key processes that accomplish the work of the organization that yields your overall performance results.

ALL actions point toward Results.

The horizontal, two-headed arrow in the center of the framework links the two triadsa linkage critical to organizational successand indicates the importance of feedback in an effective performance management system.The system foundation for the performance management system (bottom of the figure) is composed of Measurement, Analysis, and Knowledge Management, which are critical to a fact-based, knowledge-driven system for improving performance and competitiveness.Whether being used as part of a self-assessment or as part of a Baldrige application, the Organizational Profile provides a snapshot of the organization, the key influences on how it operates, and the key challenges it faces. The placement of the Organizational Profile at the front of the Criteria sets the organizational context for responding to the Criteria Items. The Organizational Profile helps everyone (e.g., organizations using the Criteria for self-assessment, application writers, and reviewers) understand what is most relevant and important to the organizations business and to its performance.The Organizational Profile is the starting point for self-assessment and for writing an application. If you identify topics for which conflicting, little, or no information is available, it is possible that your assessment need not go any further and you can use these topics for action planning. By addressing the questions in the Organizational Profile, potential gaps in key information can be identified, and areas that affect key performance requirements and business results can be brought into focus. P.1 Organizational Description asks What are your key organizational characteristics? It asks an organization to describe its business environment and its key relationships with customers, stakeholders, suppliers, partners, and collaborators. It also asks for a description of your governance system.P.2 Organizational Challenges asks What are your key organizational challenges? It asks an organization to describe its competitive environment, key strategic challenges and advantages, and system for performance improvement. It includes a request to identify available sources of comparative and competitive data to emphasize the need for these sources and to provide a context for later responses.All responses to the Items within the boxed Categories (1 through 6) should address Process. Responses to the Results Items should address trends, performance levels, and comparisons, as well as the breadth and importance of the results. Because the bottom line for any organization is results, almost half of the application points are for results.Results must be supported by linkages to the appropriate Process Items to show cause and effect. Results may be the bottom line, but they are accomplished through a successful performance management system that is guided from the top.