Com­plex­ity is sim­pler than you think

The Smart Manager - - Contents -

Kay Ken­dall and Glenn Bodin­son, authors of Lead­ing the Malcolm Baldrige Way, dis­miss mis­con­cep­tions re­gard­ing ex­cel­lence mod­els.

Kay Ken­dall and Glenn Bodin­son, authors of Lead­ing the Malcolm Baldrige Way, shat­ter myths about ex­cel­lence mod­els such as Baldrige and EFQM.

01 ex­cel­lence mod­els are too com­pli­cated

Quite the con­trary. All these mod­els do is pro­vide a list of pro­cesses that suc­cess­ful or­ga­ni­za­tions have and ask about your pro­cesses for ac­com­plish­ing the same im­por­tant ac­tions. It is true that there has to be some com­plex­ity to any good man­age­ment model be­cause to­day’s busi­nesses com­pete in a very com­plex and com­pet­i­tive en­vi­ron­ment. An ex­cel­lence model that is rel­e­vant to to­day’s busi­nesses will re­flect that com­plex­ity. But com­plex should not be con­fused with com­pli­cated. Within com­plex­ity, we see im­por­tant re­la­tion­ships and link­ages.

The Baldrige Ex­cel­lence Frame­work (and its re­lated Euro­pean model, EFQM) pro­vides a holis­tic ap­proach for lead­ers to view their or­ga­ni­za­tions as a sys­tem rather than a collection of siloed de­part­ments or busi­ness units. Its non-pre­scrip­tive ap­proach means that all ex­ist­ing qual­ity ini­tia­tives, such as Lean or Six Sigma, can eas­ily be in­te­grated un­der the frame­work. The frame­work pro­vides this non-pre­scrip­tive ap­proach in two ways. First, it begins with an or­ga­ni­za­tional pro­file; this sets the con­text for the or­ga­ni­za­tion. The ques­tions in the pro­file pro­voke di­a­log among se­nior lead­ers to un­der­stand if they are on the same page re­gard­ing how the or­ga­ni­za­tion op­er­ates to drive its strat­egy. It takes a tacit agree­ment on what is most im­por­tant to the or­ga­ni­za­tion and makes it ex­plicit. Sec­ond, the frame­work is com­prised of ques­tions that ask se­nior lead­ers to con­sider how their or­ga­ni­za­tions should do things rather than dic­tat­ing a spe­cific ap­proach. This al­lows ex­ec­u­tives to use the ap­proaches that align with their or­ga­ni­za­tions’ vi­sion, mis­sion, and val­ues. Noth­ing could be sim­pler than align­ment and ex­e­cu­tion.

02 im­ple­ment­ing an ex­cel­lence model is too ex­pen­sive

There is ac­tu­ally very lit­tle in­vest­ment that needs to be made in im­ple­ment­ing an ex­cel­lence model be­yond the ed­u­ca­tion se­nior lead­ers and oth­ers will need to truly un­der­stand the frame­work. That can be ob­tained through books on the sub­ject, re­lated con­fer­ences, or ex­pe­ri­enced con­sul­tants. An­other pow­er­ful way of learn­ing the frame­work is by be­com­ing an ex­am­iner for a Baldri­geor EFQM-based award pro­gram.

The more than 50 se­nior lead­ers from over 30 Baldrige or Baldrige-based award recipients we in­ter­viewed all told us how us­ing the Baldrige Ex­cel­lence Frame­work im­proved their or­ga­ni­za­tions’ per­for­mance in tan­gi­ble ways. Many cited the ROI that en­gag­ing their work­force pro­vided—re­duced turnover, higher pro­duc­tiv­ity, and in­creased cus­tomer loy­alty. Em­ployee en­gage­ment also re­sulted in safer work­places.

Job growth is also a mea­sure of ROI. The seven or­ga­ni­za­tions that have won the Baldrige award twice boast a 63% me­dian job growth com­pared with only 3.5% for a matched set of in­dus­tries and time pe­ri­ods. In ad­di­tion, those same seven two-time award recipients achieved a 92% me­dian growth in rev­enue from the time they first won the award un­til win­ning the sec­ond time. All of those re­sults demon­strate an inar­guable ROI. In fact, we be­lieve that not us­ing this proven frame­work is likely to be very costly for or­ga­ni­za­tions as they lose their com­pet­i­tive edge with those that do.

03 it takes years to reap the ben­e­fit from in­vest­ing in an ex­cel­lence model

If this were true, no one would use these ap­proaches. Yet many do. We all know the say­ing, “Suc­cess is a jour­ney, not a des­ti­na­tion.” But each step of that jour­ney must pro­vide the im­prove­ment we need to grow and be more com­pet­i­tive.

One of the ear­li­est ben­e­fits comes from the se­nior lead­ers com­plet­ing the or­ga­ni­za­tional pro­file, men­tioned pre­vi­ously. Hav­ing align­ment at the se­nior lead­er­ship team level is key to hav­ing align­ment through­out the rest of the or­ga­ni­za­tion. Let us share an ex­am­ple.

The Baldrige Ex­cel­lence Frame­work pro­vides a holis­tic ap­proach for lead­ers to view their or­ga­ni­za­tions as a sys­tem rather than a collection of siloed de­part­ments or busi­ness units.

We were work­ing with a large health­care sys­tem that was ap­ply­ing for their state’s Baldrige-based pro­gram’s top-level award. Two of the ques­tions at the be­gin­ning of the or­ga­ni­za­tional pro­file were, “What are your main health care ser­vice of­fer­ings? What is the rel­a­tive im­por­tance of each to your suc­cess?” Be­lieve it or not, the se­nior lead­ers of this suc­cess­ful health­care sys­tem could not agree! One, it was clear that they had never had an in­ten­tional dis­cus­sion about this. Two, they did not even agree on the cri­te­ria for mak­ing the de­ci­sion.

One of the ex­ec­u­tives said it would be their ob­stet­rics and gy­ne­col­ogy ser­vice line be­cause of the vol­ume of ba­bies de­liv­ered. An­other coun­tered, “But we lose money on ev­ery de­liv­ery.” While an­other said, “But it’s usu­ally the mother in a fam­ily who makes the health­care de­ci­sions. If we give moth­ers a good ex­pe­ri­ence when they have their ba­bies, we are likely to have those fam­i­lies as cus­tomers for life.” Each of the main ser­vice lines was de­bated in a sim­i­lar fash­ion.

Just think about the con­se­quences of that lack of align­ment at the top of the or­ga­ni­za­tion. In­vest­ment de­ci­sions, mar­ket­ing de­ci­sions, staffing de­ci­sions, and more are in com­pe­ti­tion—driv­ing the or­ga­ni­za­tion fur­ther from its in­tended vi­sion.

Not a sin­gle ex­ec­u­tive we in­ter­viewed said that he or she wished they had de­layed get­ting started. In fact, the pre­vail­ing com­ment when asked about what they would do dif­fer­ently was, “I wish we had started us­ing the Baldrige Ex­cel­lence Frame­work ear­lier.”

The Make in In­dia ini­tia­tive has am­bi­tious ob­jec­tives, and se­nior lead­ers of busi­nesses could ben­e­fit from a proven frame­work that re­flects the lead­ing edge of val­i­dated lead­er­ship and per­for­mance prac­tice. How will In­dian busi­nesses com­pete against world-class or­ga­ni­za­tions if they do not know how such or­ga­ni­za­tions are run. With the ROI these mod­els pro­vide, lead­ers who adopt an ex­cel­lence model are more likely to at­tract in­vestors who rec­og­nize their busi­nesses’ su­pe­rior per­for­mance.

The Make in In­dia ini­tia­tive has am­bi­tious ob­jec­tives, and se­nior lead­ers of busi­nesses could ben­e­fit from a proven frame­work that re­flects the lead­ing edge of val­i­dated lead­er­ship and per­for­mance prac­tice.

04 us­ing an ex­cel­lence model is im­pos­si­ble for large or­ga­ni­za­tions

There are cer­tainly some chal­lenges of be­ing a large or­ga­ni­za­tion and us­ing an ex­cel­lence model. One is the lay­ers of bu­reau­cracy to cut through to en­gage front-line staff. An­other is when an or­ga­ni­za­tion is ge­o­graph­i­cally dis­persed. In both cases, ef­fec­tive com­mu­ni­ca­tion and align­ment are ar­eas of crit­i­cal im­por­tance.

How­ever, lead­ers of large or­ga­ni­za­tions that re­ceived Baldrige-based awards de­scribed sig­nif­i­cant ad­van­tages. One, there are few sin­gle-point de­pen­den­cies on any leader. Two, there are usu­ally well-es­tab­lished com­mu­ni­ca­tion chan­nels that can be lever­aged. Three, there are typ­i­cally re­sources in­ter­nally to pro­vide ed­u­ca­tion.

The lead­ers of these or­ga­ni­za­tions also de­scribed the ben­e­fits of us­ing the Baldrige Ex­cel­lence Frame­work to make their or­ga­ni­za­tions even stronger. The first cited was the cre­ation of a com­mon lan­guage across the or­ga­ni­za­tions, re­gard­less of any ge­o­graphic dis­per­sion. The sec­ond ben­e­fit they men­tioned was the align­ment that re­sulted. Rather than hav­ing sep­a­rate busi­ness units un­in­ten­tion­ally sub-op­ti­miz­ing the per­for­mance of the par­ent or­ga­ni­za­tion, ev­ery­one was aimed in the same di­rec­tion, creat­ing lever­age and ac­cel­er­at­ing the im­prove­ments. As Dr Ru­lon Stacey, former CEO of Poudre Val­ley Health Sys­tem (a 2008 Baldrige award re­cip­i­ent) and Chair of the Board of Over­seers for the Malcolm Baldrige Na­tional Qual­ity Award, said, “It’s hard to get past the ge­og­ra­phy and cultural dif­fer­ences of how the or­ga­ni­za­tions de­vel­oped—this is par­tic­u­larly true with merg­ers and ac­qui­si­tions. That’s why us­ing the

Us­ing an ex­cel­lence model forced them to for­mal­ize pro­cesses such as strate­gic plan­ning, voice of the cus­tomer, mea­sure­ment and anal­y­sis, and even con­tin­u­ous im­prove­ment.

Baldrige Ex­cel­lence Frame­work is so im­por­tant in large or­ga­ni­za­tions. It’s the only hope for creat­ing align­ment.”

05 us­ing an ex­cel­lence model is im­pos­si­ble for very small or­ga­ni­za­tions

Over the his­tory of the Baldrige pro­gram, there have been 106 dis­tinct or­ga­ni­za­tions to re­ceive the award (seven have won it twice). Of those 106, 23 dis­tinct award recipients have been in the small busi­ness cat­e­gory, and some ed­u­ca­tion and health­care award recipients could qual­ify as a small busi­ness with their small work­force. Three of those small busi­ness recipients have re­ceived the award twice— they found the use of the Baldrige frame­work to be so valu­able that they con­tin­ued to use it af­ter re­ceiv­ing their first award and con­tin­ued to im­prove.

As with very large or­ga­ni­za­tions, very small or­ga­ni­za­tions face chal­lenges too. Re­sources— fi­nan­cial, hu­man, and oth­ers—are of­ten scarce. It may seem in­tim­i­dat­ing at first. In en­tre­pre­neur­ial, startup or­ga­ni­za­tions, se­nior lead­ers are of­ten filling mul­ti­ple roles, and this struc­ture may seem to be too much, too soon. How­ever, lead­ers of very small or­ga­ni­za­tions we in­ter­viewed talked about the ben­e­fits of adopt­ing the frame­work. Us­ing an ex­cel­lence model forced them to for­mal­ize pro­cesses such as strate­gic plan­ning, voice of the cus­tomer, mea­sure­ment and anal­y­sis, and even con­tin­u­ous im­prove­ment. For­mal­iz­ing these pro­cesses and oth­ers re­duced vari­a­tion, which led to im­proved pro­duc­tiv­ity and cus­tomer sat­is­fac­tion. An­other ben­e­fit to very small or­ga­ni­za­tions was the Baldrige Ex­cel­lence Frame­work’s laser fo­cus on the most im­port is­sues a busi­ness faces. Sev­eral lead­ers shared that this caused them to pri­or­i­tize, which led to more sus­tain­able re­sults through a fo­cused work­force.

Fi­nally, very small or­ga­ni­za­tions do have some ad­van­tages over larger or­ga­ni­za­tions. They are typ­i­cally more ag­ile. Com­mu­ni­ca­tion is more rapid and with less dis­tor­tion than when fil­tered through lay­ers. And many small or­ga­ni­za­tions al­ready have a strong cul­ture of team­work, so get­ting buy-in is eas­ier. ■

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