Improve Financial Performance . . . Even When Losing

Losing can actually have its benefits. But for Baldrige users, it's a common saying that everyone is a winner who takes that first step.

Because the most important reason for using the Baldrige Excellence Framework is not to win an award but to improve financial and business performance, said Juran Global CEO Dr. Joseph A. DeFeo in "5 Ways to Use National Performance Awards to Drive Excellence," one of the webinars available on the Juran website. 

"There's really one real reason why everybody should use and can use the [Baldrige framework and its Criteria] because it improves financial performance," said DeFeo. "And the Criteria improve not just the financial results of the companies that win but the companies who download the Criteria and start to apply them. [Use of the Criteria] improves the company's customer base. It improves the supplier base. It improves a lot of things."

DeFeo cited the 92% median growth in revenue and the 63% median growth in jobs for two-time Baldrige Award winners (compared with 3.5% for a matched set of industries and time periods). He also cited statistics that within manufacturer Cargill, businesses with a high degree of deployment of the Baldrige Criteria have achieved 30% cumulative earnings after taxes vs. budget vs. 13% for Cargill businesses with partial Baldrige deployment and -12% for Cargill businesses just beginning use of Baldrige.

Such results are possible for these organizations "because they got better financially by fixing and continuously improving their processes," said DeFeo. "It is a myth that . . . quality improvement removes labor, quality improvement removes jobs. . . . An organization that is improving is improving competitiveness, gaining market share, adding more business thereby creating more jobs. . . . Organizations have got to get better to keep jobs, and the Baldrige Award [winners have] demonstrated over and over again the benefits."

But the benefits aren't just for the winners.

"I got involved in the whole subject of quality and performance excellence because an organization that I was working with [in the late 1980s] was getting beat up pretty badly by international competition," he said. "Our company used the Baldrige Award [Criteria], applied for it, and I was one of the losers, which I believed benefited me greatly because I went on to utilize the skills that I learned. . . . I call [the organization] a loser, but everybody wins when you use Baldrige. The journey to get great and make profits and get customers back saved the company. We did not win the award, but we won the hearts of our stakeholders."

He added, "When you're good enough to win [the Baldrige Award], you can apply to win. And if you're not good enough to win and want great feedback, apply anyway."

The first step for many organizations is conducting internal self-assessments using Baldrige tools, such as Are We Making Progress as Leaders? and Baldrige Excellence Builder.

If your leadership team is looking for a good exercise, have leaders complete the assessment in advance, then meet to discuss what everybody thinks about the organization; "it may lead you to a new plan," DeFeo said.

After a self-assessment using one of the Baldrige tools, write an application using the Baldrige framework and its Criteria. "The application is a self-assessment tool," he said; "You use it to write about yourself and reflect on how good or bad you are at that time. Then use that application as a driver for performance."

DeFeo added that the Baldrige website is a great source for benchmarking and learning best practices in order to improve. "If your CEO, your CFO, your leadership doesn't believe that improving performance using Baldrige-like Criteria benefits you, then . . . go [to the Baldrige website and] see what these companies have done. . . . Organizations may forget that applying and benefiting from the award criteria have less to do with winning than about the improvement journey. . . . We have evaluated Baldrige winners 5 years, 10 years after they've won, and 99% of them still have strong tenets of that framework operating today."

The vast majority of Baldrige Award winners didn't win the first time. They applied, lost, improved, applied, lost, and improved. And although they eventually became Baldrige Award winners, their customers and stakeholders were winning every time that they improved.

Apply now for the 2016 Baldrige Award--feedback to improve is sent to both the winning organizations and the not-quite-yet-ready-to-win organizations.