Episode Show Notes
Episode 3 features California Council for Excellence (CEE) Vice Chair Dr. David Spong and Shields Resource Group Principal Denise Shields. David and Denise explain what the Malcolm Baldrige National Quality Award is, what happens when a company receives the award, and the impact of the Baldrige process not only on quality and productivity but on company culture.
Dr. David Spong is Vice Chair of the California Council for Excellence (CEE) – the organization that oversees the California Baldrige Award for Performance Excellence. David is a Past Chair and lifetime member of the Board of the Malcolm Baldrige Foundation. Additionally, David is a Past Chair of the Malcolm Baldrige Board of Overseers as well as the American Society for Quality. David had a 40-year career as President of Aerospace Support for Boeing Integrated Defense Systems. Prior to that, David served as Vice President and General Manager of Airlift and Tanker Programs for Boeing Military Aircraft and Missile Systems. David is the only two-time winner of the Baldrige Award for two different organizations in two different sectors.
Denise Shields is Principal of Shields Resource Group, a Baldrige-based consulting organization specializing in organizational performance excellence. From small to the Fortune 100, Denise has extraordinary experience in helping organizations by utilizing the Baldrige criteria to accomplish their dreams of performance excellence. Denise has the distinguished honor of being selected and named a Master Examiner to the Baldrige Performance Excellence Program after serving in multiple leadership roles since 1996. Additionally, she actively volunteers locally for the California Council for Excellence (CCE), which oversees the California Baldrige Award for Performance Excellence. She currently serves as Chair of CCE’s Board of Directors.
00:01:21 - Introductions
00:02:50 - Explanation of the Malcolm Baldrige National Quality Award
00:05:31 - What happens for a company when they receive the award
00:09:38 - Statistics regarding the award
00:15:24 - What about the process of the program makes such a fundamental and significant change happen for companies
00:22:12 - Differences between a small manufacturer going through the program versus a large one
00:25:26 - Resources needed and expected timeline
00:33:18 - All ways to benefit from the process whether or not an award is sought
00:35:59 - Description of the process for a company
00:37:44 - Organizations other than California Council for Excellence that can help
Gregg Profozich [00:00:02] In the world of manufacturing change is the only constant. How are small and medium-sized manufacturers, SMMs, to keep up with new technologies, regulations, and other important shifts let alone leverage them to become leaders in their industries? Shifting Gears, a podcast from CMTC, highlights leaders from the modern world of manufacturing, from SMMs to consultants to industry experts. Each quarter we go deep into topics pertinent to both operating a manufacturing firm and the industry as a whole. Join us to hear about manufacturing sectors' latest trends, groundbreaking technologies, and expert insights to help SMMs in California set themselves apart in this exciting modern world of innovation and change. I'm Gregg Profozich, Director of Advanced Manufacturing Technologies at CMTC. I'd like to welcome you.
In this episode I'm joined by California Council for Excellence (CEE) Vice Chair Dr. David Spong and Denise Shields, Principal of the Shields Resource Group. David and Denise explain what the Malcolm Baldrige National Quality Award is, what happens when a company receives the award, and the impact of the Baldrige process not only on quality and productivity but on company culture.
Welcome, David. I appreciate you being here with us today.
David Spong [00:01:13] Thank you for the welcome.
Gregg Profozich [00:01:15] Welcome, Denise. It's great to have you here.
Denise Shields [00:01:18] Thanks so much, Gregg, and thank you for the opportunity for David and I to share our California Baldrige Program story with you today.
Gregg Profozich [00:01:25] We're looking forward to hearing details. David, can you take a minute or two to tell us a little bit about yourself?
David Spong [00:01:30] Yeah, absolutely. My name is David Spong. I had the privilege of leading two divisions of the Boeing company that received the Malcolm Baldrige Award some four years apart. I sit on the board of the Malcolm Baldrige Foundation. I sit on the board of California Council for Excellence. I have sat on the board of the American Society for Quality. I've sat on the board for National Institutes of Standards and Technology. I have lots and lots of experience in manufacturing.
Gregg Profozich [00:02:01] And some direct experience with the Baldrige process and the framework.
David Spong [00:02:04] Absolutely.
Gregg Profozich [00:02:05] Excellent. Denise, can you take a minute or two and tell us a little bit about yourself?
Denise Shields [00:02:09] Sure. I actually was in the Fortune 100 world for a few years. While I was there, I discovered Baldrige, because one of our customers was using Baldrige—it was General Electric—and asked us to do so as a supplier. We were handed the opportunity without any option but to use it. What I discovered is the darn thing works. Fast forward to today—that was in 1998—I'm a master certified examiner for the national Baldrige program called the Baldrige Performance Excellence Program. I'm also serving as chair of the board for the California Council for Excellence, which is the state Baldrige program here in California serving all of our state memberships.
Gregg Profozich [00:02:50] Well, thank you both. I'm excited to have you here. I'm excited about our conversation today. Looking forward to hearing your perspectives and your insights. Let's get started. We're here to talk about the Malcolm Baldrige National Quality Award and, in particular, how the award can offer benefits and competitive advantage to manufacturers across California. I think we've all heard about the Baldrige Award at a high level—it's been around for 40-some years now—but let's get into some detail. What exactly is the Malcolm Baldrige National Quality Award? Denise, why don't you tell us a little bit about that?
Denise Shields [00:03:19] Okay, Gregg. Thank you. First of all, the award itself was passed by Congress in 1987 underneath the leadership of President Reagan. At the time, our country was losing manufacturing opportunities to Japan. I think we all know the Chevrolet and Ford stories versus Nissan and Toyota. Malcolm Baldrige actually put a focus on improving Americans' competitiveness in the international marketplace, especially with manufacturing. Manufacturing was the first category of the Baldrige Award, and it was trying to improve our own outcomes with quality and other areas of performance so that we could excel in the international marketplace. Fast forward, that program has now been expanded by Congress to service, and education, and health care, nonprofit, government. There's not a sector available in the United States that does not have the ability to compete for that award. However, a few years ago, Gregg, they actually changed the title to the Baldrige Performance Excellence Program, and the award process is part of that program. The reason they changed the name of it is they wanted to de-emphasize the name award so that organizations just weren't using it to compete. The beauty of the Baldrige is actually about the process of continuous improvement; it's really not about the award. That's the cherry on top. The process of growing your organization, and becoming more profitable, and increasing customer satisfaction, increasing employee retention and satisfaction, and quality outcomes, and all the things that are important to your organization is really what the Baldrige focuses on. Those organizations that do that really well end up actually receiving an award.
Gregg Profozich [00:04:59] I have some questions later about the internal benefits, the external benefits, et cetera, but it sounds like it's more about the process than about the event. The award ceremony isn't it. The award ceremony is a nice recognition of something a whole lot deeper.
Denise Shields [00:05:13] Yeah, it is a whole lot deeper, because it's really about improving your organization regardless of what industry you're in. Obviously, any organization wants to win an award. That's great, but very few organizations actually set out just to win the award. They really want to be good enough to qualify to win the award.
Gregg Profozich [00:05:31] I think that's a key point. David, you've been through the Baldrige process a couple of times. Tell us a little bit about what happens for a company when they receive the award. How does their world change?
David Spong [00:05:42] It is not really the way their world changes; their business changes, or their culture will change. They will all like to go to work more than they did before, but most importantly, your business results will be absolutely wonderful. The reason I say that is in the scoring criteria for Baldrige the most points awarded are based upon your results. If you don't get good results, you cannot receive an award, you cannot get recognition. It's ultimately all about results. If you go back to how does your world change, all of a sudden, you become a very high-performing company in the business world. I'm not talking only business—health care organizations, every one. They are satisfying their customers; they are making money; they are covering their expenses; and the employee culture is awesome. I've listened to 20 years of companies who have received recognition describing their performance and what happens. Every one of them says it's the culture that enables great performance. I used to think it was a by-product. I think today it is necessary that the culture change in order that you achieve this wonderful world-class business performance.
Denise Shields [00:06:57] If I could add onto that a little bit. I've had the fortune of working with many organizations that have actually received the Baldrige Award. In fact, David was a client that I worked with, as well. I actually have more Baldrige recipients than any other consultant west of the Mississippi in the country. My experience with that question about how does their role change, I agree with David; it's really about their business change. Overnight, when the President of the United States presents the award to you, you are automatically denoted as an American best practice in whatever category your business is in. I'm thinking about a charter school that happens to be here in California, in San Diego. Their mission is to take kids that are kicked out of high school, and yet they have a high school graduation rate of 98%. You think other charter schools could learn from them? Absolutely. Nobody heard of them unless you're in California, even San Diego, but when they won the Baldrige, they're standing on stage with the President of the United States, and the President's office is saying you're an American best practice. Part of the obligation that David himself did, and the charter school, and others that win, you are obligated for a year to tell your story and to share your best practices with others. That takes place at conferences; it takes place with personal invitations. I know that Mary Bixby, the President and CEO of The Charter School of San Diego, had numerous speaking requests. People want to learn from you, because you are suddenly an expert. Even though you've been the expert all along, now you've got the fame that goes along with it. I would just like to share that I agree with what David says—it's about the culture—but there is an external component of an unbiased group of examiners associated with the Baldrige Award. That's true here in California, too, the California Council for Excellence examiners that are going in your organization, and assessing you based on the finest criteria in America, and giving you a score, and letting you know how you perform relative to that criteria. If you score well, you're a leader in the field that you're in. I do think there's an external component, too, especially the leadership team, because suddenly, everyone agrees that you are the best. Another customer of mine is Momentum Textiles out of Irvine, California. Momentum, if you sit in a Starbucks or a Marriott, that's the fabrics that they create. They're incredible. They have 60% of the American marketplace for fabrics, yet they have less than 100 employees. Very small organization. They wanted to grow, and they were meeting with investors. The day they won the Baldrige they had investors knocking on their door. Again, it's this overnight sensation of credibility that really comes with winning the award.
Gregg Profozich [00:09:38] Wow. That's an impressive set of benefits that go along with it. Not only does your quality improve, not only does your cost and performance improve, but your organizational culture changes to be one of a high-performing organization focused on quality, focused on customer needs, focused on cost performance, and you also get the notoriety. The best practices sharing that you have come from, I suppose, the best practices learning that occurs throughout the process. We'll get into that in a little more detail. It sounds like there are a lot of benefits both tangible and intangible that go along with the process. Tell us about the history a little bit. Again, we're focused on manufacturers. I know that Baldrige is across many different industries now. How many companies have applied for the Baldrige Award? How many of them have been awarded since its inception? Of those, what's the percent of manufacturers, and has that changed recently?
Denise Shields [00:10:26] I will say that looking at small to medium-sized manufacturers is what I really focused on because of your audience for this podcast. It's really about 22%. Almost a quarter of the applicants are small to medium-sized manufacturing organizations. Also, if you look at all the years between 1988, which is the first year that President Reagan actually presented the award, to today in 2020, the number of applications for manufacturers was 360 in total, and that's composed of a total audience of 1,767. Basically, what we're looking at is a combination of manufacturing and small business. Small businesses had 385 total recipients. That's over 700 right there with just those two. It's a major component of the award. Now, health care has the last seven years really increased their participation. That's actually part of the award history, because health care with Obamacare changed the way that they get reimbursed. The reimbursement rates for health care today by the insurance companies and the Center for Medicaid and Medicare is impacted by performance, customer satisfaction and performance, called Ajax scores, which we won't go into. Bottom line is that health care is a really huge applicant today trying to improve their quality and performance excellence statistics, as well. Manufacturing is definitely one of the largest categories, actually the largest category of all the applications. I would just encourage that organizations here in California know that Baldrige was founded based on the manufacturing segment and continues to be actively involved. We would welcome coaching, and working with them, and sharing more details with them about the California Council for Excellence and the Baldrige process here in California.
Gregg Profozich [00:12:18] Thank you, Denise. Anything to add, David?
David Spong [00:12:20] The only thing I would do is actually go back to your previous question. I didn't share my experience. On the first program that I worked on where we used Baldrige started around 1991. This was a program called the C-17 program. If you watched the evacuations from Kabul, you saw my C-17s doing that evacuation with 700 people sitting on the floor of those wonderful airplanes. When I arrived there in 1991, the program was in deep, deep trouble. It was threatened with cancellation. We had orders only for 40 airplanes, and we weren't going to get any more unless we performed. Nineteen ninety-one is the year that McDonnell Douglas started using the Baldrige program. In fact, James Sanford McDonnell, who was running the company, was one of the founding members of the Baldrige program. They said we would use it. We did use it, because they told us to. We went in six years, and eventually, we received the award. By that time we had orders for 180 airplanes. Customer loved it. Our shareholders loved it, because we were making money. Yet today I get people contacting me on LinkedIn. They find my name. The thing they want to tell me was the C-17 program was the best program they ever worked on in their 40 years in the business. Everyone is happy. The culture is there; the people love it; the customer loved it. Just for reference, we built 268 airplanes after being told we were only going to get 40 if we perform. That's what Baldrige does for you. It turns a program that was in the mud into a world-class organization, a world-class product.
Denise Shields [00:14:06] A lot of organizations think because of the focus on the word award that you have to be really, really good. In fact, someone said to me recently, "Well, we're not good enough to get started." I said, "Well, let me tell you about David Spong." David, when I've heard you tell that story before, I've heard you use the example, "When you're at the very bottom of the pit, the only way to look is to look up." That's how it was, because the Air Force was threatening cancellation with you. It's really a program that can help your business recover from any source that it has, and excel, and become a world-class best organization. David's been a little bit humble, too. The Department of Commerce is where the Baldrige Program resides in the government structure and, more specifically, in a department called NIST, the National Institute for Standards and Technology. NIST and the Department of Commerce have actually named a national leadership award after David, because he's the only man in America that has won the Baldrige twice, both for manufacturing and service. Other companies have won it twice. It's for the same organization applying more than once. David's the only one that has what we call the double Baldrige Award. I have to tap his experience a little bit there, because he's too shy to do it.
Gregg Profozich [00:15:24] Thank you, Denise, for that and for sharing that background and that breadth of experience that David brings. I think it's an incredibly impressive turnaround story, really. It sounds like the Baldrige process, not the award, the process of getting to the award is what matters. What is it about that process that makes it work, that makes such a fundamental and significant change happen?
Denise Shields [00:15:45] The Baldrige criteria, Gregg, has a maturity model associated with it. I'll give you an example. There's four components of the maturity model where it comes to process, and the first component of the four is called approach. Basically, it's what's your process? Baldrige is not a prescriptive criteria where they tell you this is what you should be doing; the Baldrige criteria is nothing more than a set of questions. For example, how do you assess customer satisfaction? An organization's approach might be we have an annual survey, and we do that survey to all of our customers on an annual basis, and we get the results, et cetera. The second component of that four-stage process is called deployment. The question with deployment as it relates to those customers is: do you have different segments of customers, and if you do, are you deploying that process across all those segments or just some of those segments? For example, if you think about a hospital, one segment could be an outpatient; another segment could be an inpatient. To get full deployment, you should be really surveying both segments. Most organizations would think that inpatients actually are more populous than outpatients, but usually in a hospital environment patients are about 60% outpatient. If you're not doing outpatients and just inpatients, you're only getting about 40% of your customer base. We look a lot at deployment. The third component is called learning. We've got approach, deployment, and learning, ADL so far. Learning is how do you look at those customer satisfaction results and actually learn and make different process changes based on what your customers are telling you? It's one thing to do a survey; it's another thing to be responding to the survey and make process changes for improvement. The last component is "I," which stands for integration. How do you integrate those changes across your whole organization so they can be the best it can be? What a lot of organizations do is they try to teach their employees these components of the Baldrige criteria so the employees are thinking about what is our approach, what is our process? Is it fully deployed? How are we learning? How are we improving? Are we sharing this information across the organization? One of the best tips I think David would agree with, because he did this himself, was to have internal employees become state examiners and learn the Baldrige process. You're embedding that knowledge as part of your day-to-day work. I think that it's not that the Baldrige itself, the criteria is itself prescriptive—it's a list of questions—but it's how you filter those questions in those four areas of process improvement, looking at the approaches, looking at if it's deployed properly, looking at the learning, looking at the integration that's really the crux of it. David, I'm going to throw the ball to you and ask you to add on, please.
David Spong [00:18:34] Yeah. I tend to talk examples. As Denise said, criteria is nothing but a long list of questions. When you look at the questions as a neophyte, you can answer a few of them, or you think you can. Some of them you realize that you don't know what the right answer is, and some of them you don't have a clue. Now, you're writing an application, and you're trying to answer these questions. I was particularly involved with leadership. One of the questions I'll paraphrase is: how do you install an ethical culture in your organization? How do you lead that? You think, "Yeah, I'd like to have an ethical culture. How do I do that?" You realize you need to do it and maybe you're not doing it. Then you start to develop communications such that people know that you stand for ethics, and quality, and all the good things that an organization needs to do. These questions point you in the right direction. I can still remember being involved with an application, and as I read the questions, I think, "We don't do that. We should do that. Let's do that," such that you hope by the time you get a site visit some six months later, you're actually doing it, and you can brag about it. It is that giving you all that awareness of what you need to do and you know you're not doing. Now, sometimes you get a question you don't really understand. That's when you turn to your consultants like Denise, and you say, "What does this mean? What's a good process for that?" Then you can start to benchmark with other organizations and learn how to do it. It is that constant reinforcement, that constant building. The first time it took us six years to do it; the second time it was a mere four years. It's building on what you do, and adding to it, and just constantly improving. I like to say it was magic. It isn't, but it certainly had that appearance.
Denise Shields [00:20:34] That's a very good point that David brings up. I will share with you that when Baldrige examiners look at the performance of a Baldrige applicant, whether at the state level or the national level, when we look at the results, we're looking at three to five years of trend data for results, not just one data point. For Baldrige we're looking for continuous improvement over time with those results, and we're also looking at how are your competitors. How do you perform in relationship to a McDonnell Douglas, et cetera? One of the things I think it's really important for your listeners to understand is if you use the Baldrige Program, you will glean better results, whether it's quality, on-time, supplier performance, employee engagement, customer satisfaction, financial results, ethics, as David just talked about. Whatever those results are that you're aiming for, the ones that are important to you, those will improve over time. That's the beauty of the Baldrige, and that's why we do it. That's why I changed my entire career to focus on Baldrige, because it works. It's like David said. It's not really this magic pill, but it certainly is successful. We've got dozens and dozens of organizations that have won the Baldrige. By the way, their applications are available online. I can give you the link [How to Apply for the Baldrige Award | NIST] to that so your customers can access those. It's part of the public database with the Department of Commerce. You can look at those results, and you will see trend data going up, up, up, up. Sometimes you want results to go down, like with mortality. You want down results, not up results, but good results, positive results.
Gregg Profozich [00:22:09] Going in the right direction?
Denise Shields [00:22:11] Going in the right direction.
Gregg Profozich [00:22:12] Excellent. It sounds like it's very in-depth, a lot of soul-searching that's going to go on on the part of people going through the process. David, as you talk through some of those questions—we don't do that. Wait. We should do that. Hold on a second. Why don't we do that? That's a great idea—that kind of thing, it sounds like there's a lot of eureka moments like that. I'm curious, the small manufacturer versus big manufacturer. I know, Denise, you talked earlier about small manufacturers are some of the applicants. Small manufacturers are our focus here at CMTC. Is there any reason that the results would be different, or the benefits would be different, or the challenges of applying for or walking through the process would be different for a small manufacturer as opposed to a large?
David Spong [00:22:51] I think the best way to answer it is to compare and contrast. The first award we received, we received at the same time that a small manufacturer received an award, Texas Nameplate. This is in the last century. It was just a while ago. It was in 1999 that we received the award for our 1998 performance. Texas Nameplate had no ability to make slides other than drawing them on a piece of paper. They were a 30-person company, and yet they received the award the same time we did. My friend Dale Crownover, who led that company—still does today—we would compare. "I don't know how you do it in a 20,000-person organization," and I'd say, "I don't know how you do it in a 30-person organization." The power was it worked in both. Now, the approach, in a sense, was a little different in that I had the budget to hire consultants like Denise and others. I had the budget to fund one or two internal people to help do this. Dale couldn't afford any of that. So, he went to the Texas state program and said, "I want to be an examiner. Train me." They did. He learned it himself. He followed it all through, learned what other organizations were doing, and brought that back into his company, and then developed internal experts who had their day job and their evening job. I don't mean that unkindly. In essence, lots of people got additional assignments that ultimately, they wrapped into their day job, because it all just became part of what they do, not something extra. The results they got were incredible, just like ours were. The culture was incredible. Since then, they applied again and won again. They are still doing it today. Dale, I can remember what he said. He was listening to the radio one day and heard about most family-owned businesses rags to riches in three generations. He said, "I'm on my second generation. My dad started it. I don't want it to go out of business when my children take over." He did it to perpetuate his company, and it's still going strong today. The simple answer to the question: are there differences—only natural differences, but the results are the same. It's just you have to tailor it for the people and the resources you've got, but it's certainly just as achievable. As Denise said, manufacturing's had 31. Right up there they are winning awards and getting recognition just like the big boys are.
Gregg Profozich [00:25:26] Wow. Okay, that's impressive. Let's go a little more into depth, if we can. Let's talk about the application process. What kind of a commitment does an organization have to make in terms of resources to apply? David, you talked about consultants and dedicated staff, and then your friend at Texas Nameplate is going and becoming an examiner himself and then drafting people within his organization. Either way there's a certain amount of effort that's going to go on. What kind of resources and what kind of timeline? Is it a six-month process? Is it a five-year process? Let's talk about those details.
Denise Shields [00:25:56] Honestly, it depends on where you start. Let me share with you, first of all, that it's very important for your listeners to understand that with the Baldrige process at the national level, I liken it to the Olympics. You have to qualify to compete at the Olympics. You have to qualify to compete at the national level at the Department of Commerce. We have an alliance nationwide between the state programs and the national program. What happens is—and I'll use Momentum, because they're the closest to the small manufacturing organization you're speaking of—when they applied, they went through our state program first. When they won our top level, which is what we call gold—by the way, you used the word eureka a while ago. We actually call it the Eureka Award—that Eureka Award is the entrance to the national playing field. What happens is organizations start in California, and when they win the gold level, they go on to compete at the national level. However, not every organization is ready or even wants to compete at the full 50-page Baldrige application at the Eureka level. At the state program our goal is a little bit different than the national program. At the national program the goal is to identify America's best practices. It's the top of the top. At the state level our goal is to help you improve every single year. We have a couple of different entry points. We certainly have the full 50-page application. To share with you another part of your question—does it take four months or five years—it's a manufacturer organization called Solar Turbines, which is an organization owned by Caterpillar. Solar competed in one the very first year that they applied at the Baldrige, but other organizations want to take their time, like Boeing did. Boeing applied a couple of times before they won, because they were fine-tuning and improving every single year based on the examiners' feedback. In California you can certainly apply at the 50-page level. Every year we have organizations that do that. But we also have a shortened version of the application, which makes it a little bit easier, called the Prospector. It's 25 pages. We also two years ago founded — we just had our first recipient of this, Desert Springs School District in Palm Springs area — the category only award, where you would just select a category. It might be process; it could be employee or workforce category; it could be leadership, strategic planning, whatever category you want to apply for, and just start there. Our goal is to keep things as easy and simple as possible and just help organizations get started. Actually, there's a conference coming up in San Diego on October 19 and 20, 2022. There will be a Baldrige regional conference with organizations and speakers sharing their best practices, lots of conference time getting to know people, asking questions. The California Council for Excellence organization that David and I are on the executive board for is hosting that. We would definitely encourage that, and we'll provide you a link to that conference information. I would encourage your listeners if they're interested in Baldrige, that's a great place to go and meet organizations that have won the Baldrige, both at the state level and national level. We always have best practices represented there. It's a really great opportunity to truly get to know more about this process.
David Spong [00:29:22] The only thing I would add is that when you go through the process, at the end you get a feedback report. The feedback report tells you your strengths and your weaknesses, except we don't call them weaknesses; we call them opportunities for improvement. When you look at them, there's some of them that are almost no-brainers, low-hanging fruit, let's call them. If you have limited resources to apply, go for the low-hanging fruit. The others will still be there, and get to them when you can. Typically, you come up with a priority of which things you can fix soon. Apply your resources appropriately. We certainly did that. You can't fix everything one go, but you certainly know which is the stuff that you're to get to first. I think, again, you can tailor your resources to what is real for you.
Gregg Profozich [00:30:13] It sounds, in listening to both of you, the real value in this is regardless of whether I want to apply for the award, regardless of whether I want the notoriety, the process gives me an objective set of examiners who are going to give me honest feedback based on industry best practices, based on cross-functional expertise and knowledge to say these are things that would help improve your operation. It could be a helpful road map for continuous improvement. I get this list of opportunities. There's 22 of them. Well, the first seven are easy. They're low-hanging fruit. Let's do them this year, and then next year when they're done, I've realized some opportunities; I'm making more money; I'm serving customers better; I'm building a culture. Let's revisit the next set, and the next set, and keep chipping away. It's a road map for incremental continuous improvement.
Denise Shields [00:30:55] Yes, absolutely. I will add that, again, one customer of mine—I mentioned them before, Momentum, the fabric company—had a really interesting approach. They did not at all apply. I had to talk Roger Arciniega, who's the President/Founder of that organization, into applying for the Baldrige. The history was that they take the Baldrige criteria... They have 11 different departments in the organization. They have five key process and six support processes, key process being sales and design for the fabrics. Examples of support process may be HR, marketing, things like that. They actually developed a little 10-page application, and they had each of their 11 departments apply internally every year. This application was built on metrics. What the metrics were for those 11 departments are all different. For sales it's obviously sales; for HR it was employee retention. Whatever the metrics were that was important for that department to contribute to Momentum's overall success, this award was designed. Then they would hire someone like me to review those 10 applications and get them prescriptive feedback telling them this is what you need to do to improve your department. These were tied to the employee performance evaluations. Now, if they won at the gold or platinum level, they didn't get money, because Roger didn't feel comfortable giving them money for the internal award. But what he did is he gave them two or three days extra vacation. Let me tell you, that thing was internally so competitive. They ended up having a presidential dinner every year, and we would go. It was so competitive. People wanted to improve. They wanted to be denoted in their own organization as a best practice. I thought that was brilliant. What happened over time as they kept improving, improving, improving, I finally said to Roger, "You've got 60% of the US market share in fabrics. You need to apply for the Baldrige Award, because all of your results are outstanding." There was nothing that they didn't beat their competitors on. He did, and two years later they won the award. You can use the Baldrige criteria in different ways depending on what your internal motivation is. Of course, apply for an award and win it, but you can also use it just internally to make yourselves better. There's probably a dozen ways to slice and dice that approach.
Gregg Profozich [00:33:19] Absolutely. I think I want to resonate on this just a little bit more, because I think this is a key point for the small to mid-sized manufacturers. I often will say—I don't mean anything negative by this—the average small to mid-sized manufacturer... It's a generalization, so it's more wrong than right, but it makes a point. The average small to mid-sized manufacturer is so busy working in the business, they can't work on the business. Sarah, the owner and CEO, is at her desk, and she finds out that Joe just called off sick. He went home sick. Sarah gets up from her desk and goes out and works the press brake, because she's got to ship product, because she's got to make the payroll on Friday. If she doesn't ship, she doesn't make... It's that kind of constraint. There's not a lot of extra leeway. In that case, how do I do this? It can seem overwhelming. Well, number one, I don't have to think about it if I'm Sarah. I don't have to think about applying for the award. I don't need the recognition. What I need is the continuous improvement that helps me build an organization and a culture. That road map can help me get there. If two, five, seven years into the process I've improved so much that I could win the award, I could apply if I want, but I don't ever have to do that. It's the criteria and the process is what I'm hearing you guys say that really is where the benefit is and really where the value in this whole thing is. If that's the case from the California Council for Excellence perspective, I think that you guys are broken into meaningful chunks. We talked about the Eureka level, where it's the full 50-page application for a state level Baldrige award recognition. It's the Prospector level of the 25-page app. Are there other subdivisions and sections, ways I can slice and dice the process so that I can start getting the benefit whether or not it's on the eventual road to just improving my organization or applying for statewide or national recognition? Are there other ways to break this down into meaningful chunks?
Denise Shields [00:34:51] I would say the category only that I referred to is really meaningful. There's a 50-page award that mirrors the Baldrige application. There's a 25-page Prospector award. Underneath that is a category only. You would just apply for leadership, or you would just apply for strategic planning instead of all the entire criteria. David, do you want to talk about teams?
David Spong [00:35:14] Yes. CCE, California Council for Excellence, also offers another version that deals specifically with teams. Often a team will be focused on the process they need to improve. They need to develop a process where one doesn't exist. Again, we have a series of criteria around that, where people can apply for a team's award and learn about how to develop processes, and procedures, and things of that kind. In particular, in small organizations like LEAN and things of that kind that are so often used, it's all about improving a process. We can recognize that; we can help with that; and we can help define the best way to do it.
Gregg Profozich [00:35:59] Okay. There's lots of different ways of support available. There's lots of different structures and processes that can be followed to make this much more manageable. What are the mechanics of the process of actually being considered for an award if we went that far? Is it a proposal? Is it an on-site review? What happens to me? I'm the President of ABC Manufacturing. I want to go through the process. What's my life going to look like?
Denise Shields [00:36:21] What I would recommend as a first step is to contact the California Council for Excellence, who can provide you the phone number as well as email address, and speak to the program manager there, and find out what your goal is. Is your goal an award? Is your goal just to improve? Our response to that question is going to vary depending on what your goals are. We have a tailor-made approach to every organization that we work with. We highly encourage membership with CCE, because if you are a member, you're going to have access to our conferences as well as all of the emails and national program analysis related to Baldrige. Obviously, the program manager can also get you signed up as a membership. We do our memberships based on size of the organization. It'd be inexpensive for a small manufacturing organization to become a member of our great organization. I just want to encourage people to think it's really as easy as making that first contact with CCE, because we can handhold you and walk you through the process, again, depending on what your goals are. What I don't want people to do is say, "Oh, I've got to go through this application process on my own." It can be a little daunting. As David once said to me, Baldrige can be not for the faint of heart, but at the same time, that's the purpose of we're here. We're here to support organizations in California utilizing the Baldrige in the most friendly, easiest path possible.
Gregg Profozich [00:37:44] Are there other organizations that can help out along that process, as well?
Denise Shields [00:37:49] We are the only official Baldrige Program in California. Obviously, there are consultants that can help. Again, the California Council for Excellence has a pool of consultants that we can refer. David actually manages that process, because I have a conflict of interest in that I'm a consultant myself. We actually asked David to manage that. What he does is he listens to your needs and decides which location you're in, which consultant is closer to you so you don't have to spend a lot of money on travel. Of course, a lot of consulting is now being done virtually, which is great and very effective, by the way. We just want to handhold our members and make sure that they're getting the best of their membership from us by providing services and consulting to meet their organization's needs, whatever it may be.
David Spong [00:38:38] Let me jump in, too, in that manufacturing organizations often have a very close tie to the American Society for Quality. I was a member. I still am a member of ASQ. I was on the board for six years or some number like that. What I found was lots of ASQ members are Baldrige examiners, and lots of them work for companies. Often small companies actually have a link already into the Baldrige program and probably CCE, because we find a lot of the members are already examiners. I would ask someone in a small manufacturing company to look inside as well as look to CCE, and maybe together you can find you have resources that maybe you didn't even know you had.
Gregg Profozich [00:39:26] A lot of information we've covered today. Thank you very much for all the information. Is there anything else that you feel is important to cover before we wrap up?
Denise Shields [00:39:34] I just want to emphasize the importance of the purpose of the Baldrige Program, and that's true of the California Council for Excellence, as well. Our goal is to help organizations improve their business results, whether that be traditional quality measures, whether that be employee satisfaction, whether that be other types of metrics that your board or your own organization, such as financial, are important to you, whatever those are. What we like to do is understand the organization itself and what's important to your organization, what are your key performance metrics, and then we help you get there. We're only focused on improving organizations as our members. I think that's the most important thing, because a lot of organizations assume it's about the award, but it's really about the process and results. Then if those all happen, the award comes naturally, like it did for Momentum and like it did for the charter school, because their results were a result of their efforts in continuous improvement.
David Spong [00:40:35] I would like to add something. Again, it's a story. The first time I became involved with Baldrige I was given this document to answer these questions. I'd written a billion proposals in those days. I answered the questions in the most optimistic way I could. I was selling. I was writing a proposal to get money from somebody. I turned this in. We had some internal examiners. This very nice young lady came in and sat down and talked to me about it. Basically, her message was, "Nice try, but what's the truth?" You've got to be really objective when you answer these questions. If you don't have a process, then admit it. Don't say you've got one because you did something just like we did in proposals. The beginning of this the first time you're involved, you've got to be scrupulously honest with yourself just to make sure that you identify what things you need to do to improve. Really, when you think about it, it's something you're doing for yourself and for your company to improve. You're not selling a proposal. That's what I was trying to do. I was lucky. The young lady that came and talked to me was kind. I won't tell you what score I got. It wasn't very good.
Gregg Profozich [00:41:51] Well, David, thank you for that. Denise, thank you for that. I'm going to try to do a quick summary here. If I miss anything, feel free to add it at the end. To wrap up, let's talk a little bit about what this is all about. It's all about the Baldrige Performance Excellence Program, formerly known as the Malcolm Baldrige National Quality Award. The purpose here is to help organizations improve their business results, whichever of those business faults they want to focus on or all of their business results across the board. Baldrige has a history of trying to improve quality back from the 80s when Japanese steel was taking over and Japanese companies were beating us at the quality game based on all the learning they got from the Jurans and the Demings as they rebuilt after World War II. It came full circle to fruition, and we realized we had to do something. Congress passed the act in 1987. President Reagan was the first one to do Baldrige awards. It's been a very effective tool for companies to improve quality. It can result in some very significant changes, creating a high-performance organization in terms of cost performance, quality performance, customer satisfaction, as well as the organizational culture. It really sounds like, from this conversation, that the culture is really the main driver and the main benefit, because that culture of continuous improvement, that culture of looking at things, and developing process, and trying to put metrics on them and be able to always tie it into the results is what's being built here. It becomes an American best practice, I think is the term Denise used. If you were to apply and win the Baldrige Award, you would be known as American best practice; you would be known as the best of the best in a given area, in your given industry. The process is based on an unbiased group of examiners. They assess and give scores, and they give feedback. It's not a one-time application and you either pass or fail; it's a one-time application and you get feedback. You can apply again the next year and the next year until you've got it. The importance isn't that you've applied in one or not; the importance is that you're showing that track record of continuous improvement. Whether that track record of continuous improvement is for external purposes and notoriety or just for improving your business and building a more sustainable long-term scalable organization, you get benefit from it. Manufacturing is the largest set of applicants, I think, still to date. Small and mid-sized manufacturers are upwards of 22% of the applicants, if I have these numbers correct from our conversation. Just because it's a small company doesn't mean that the Baldrige criteria is too much or the time commitment or the resource commitment is too much. It can be done and is frequently done by small to mid-sized manufacturers. The four-stage process that we talked about a little bit—the approach, deployment, learning, and integration, where the approach is looking at processes, and do you have them, and are they well-defined, and how do they work, and how well do they suit you? In deployment, do you have those processes in place across all of the markets and all the departments that you should? Then the learning process. Based on the process changes that you would make as you deploy things and based on the feedback that you get, you make process changes and improve things. Then, how well do you integrate that into your learnings? From a high level, how the Baldrige Performance Excellence Program looks at a company. Do we have an approach; do we deploy that approach; how do we learn from that approach in that deployment; and then, how do we make sure we integrate that fully across the organization? That's what I gleaned, anyway, as the high level pieces here. We talk about the Baldrige Performance Excellence Program. That's at a national level, but there's also things that are done at the state level. Denise reminded us and shared with us that it's like the Olympics. You have to qualify for the national competition at the state level. There are ways you do that, and it can be broken into a number of manageable, more bite-sized chunks, if you will. The California Council for Excellence has the Eureka level, which is the highest level, where you're applying for a state level Baldrige Award, or the Prospector level, which is a shorter 25-page application, or the category only, where you're looking at just one category at a time. In terms of incremental steps, maybe I do leadership first this year, and I take strategic planning next year, and then I take the next category and work through the next categories over a series of years. My business improves all the while, and at some point if I want to, I can apply for the award. It's really not, again, about the award; it's about improving business results. That is the whole purpose of the process in the first place. Lots of resources available to help along the way. California Council for Excellence here in California and, I believe, other organizations across the nation are Baldrige sponsored or certified for state assistance. There's also lots of consultants out there who can help. There is a conference coming up later this year for California in San Diego in October. Did I miss anything there? Anything part of that summary that I misstated?
Denise Shields [00:46:32] Two things I heard that I would maybe tweak a little bit.
Gregg Profozich [00:46:35] Sure.
Denise Shields [00:46:36] When I say that the Baldrige Performance Excellence Program's title replaced the award, but I don't want it to sound as though we replaced the award, because the award process is actually part of the Baldrige Performance Excellence Program.
Gregg Profozich [00:46:50] I'm sorry if I misspoke there, but yes.
Denise Shields [00:46:52] That's okay. It was very minor. I just wanted to make sure that people don't think that the award went away because it did not. It's very much in play. The second thing I would add is towards the end we talked about what's in it for me for an organization. When they're using the services of the California Council for Excellence, at some point they will probably want to apply for a 50-page award, because that's the only level that you actually have a team of examiners come out and visit you and provide you the feedback report that David was speaking of earlier. You want that external, unbiased opinion of those trained people to give you their perceptions of how your Baldrige journey is going. That's not consultants. Those are all volunteers with the California Council for Excellence program. It's just an application fee. You don't have to pay for their consulting time or anything. It's just part of our membership and process. I think the feedback report gives an organization its strengths and standards of things to celebrate and keep doing well and also the opportunities for improvement. David's right. We never call them weaknesses, because opportunity sounds like we can still fix it. I really think that the feedback report is, at the end of the day, one of the tangible, real benefits of this whole Baldrige process. I would like to see that included.
Gregg Profozich [00:48:08] Absolutely. Okay, David, anything else other than scrupulously honest? That was the one thing I did want to put in. I put it in my notes here, and I missed it as I went through the summary. I need to be brutally or scrupulously honest with myself about what really exists, what really doesn't exist. Do I have a process? Can I call it a defined process, or is it a way we follow it? We do it every day, so we must have a process. Well, no.
David Spong [00:48:30] As you say, scrupulously honest. To Denise's point, typically at the end of the site visit you'll get this feedback report. By the way, the feedback report tells you your strengths and your OFIs. You see the strengths, and you go, "Yeah, those are great. I agree with all that." Then you see the OFIs, and you say, "No, that's not us." You read a few more, and then finally, you just give up and say, "Okay, lay it on me. Tell me what I don't do well." You got to go through that transition. You got to be ready to accept that feedback which, as I said, ultimately, I did, begrudgingly. In the end, yes, we accepted it and tried to improve.
Gregg Profozich [00:49:11] As you were talking there I often think the stages of grief are actually the stages of change. Grief is just a massive and permanent change in your life. First, I'm in denial; then I'm a little angry; and then I start bargaining. You just went through those steps as you talked about it. We all have to come to grips with the fact that we're not quite there and our organization has some work to do. That's actually good news. We've got opportunities for improvement. We can make things better. We still have some opportunity to influence and control, and those are all good things. David and Denise, it was great to have you here today. Thank you so much for joining me and for sharing your perspectives, insights, and expertise with me and with our listeners.
Denise Shields [00:49:49] Thank you so much for inviting us. We really appreciate the opportunity to share our story and help your members benefit from that.
David Spong [00:49:56] Yeah. I'll just endorse what Denise said. Thank you for inviting me. It was a pleasure to address you all today. We are absolutely sincere. If you need help, we are here to help you. Thank you.
Gregg Profozich [00:50:08] To our listeners, thank you for joining me with this conversation with David Spong and Denise Shields in discussing the Malcolm Baldrige Performance Excellence Program. Thank you so much for your time. Have a great day. Stay safe and healthy. Thank you for listening to Shifting Gears, a podcast from CMTC. If you enjoyed this episode, please share it with others and post it on your social media platforms. You can subscribe to our podcasts on Apple Podcasts, Spotify, or your preferred podcast directory. For more information on our topic, please visit www.cmtc.com/shiftinggears. CMTC is a private nonprofit organization that provides technical assistance, workforce development, and consulting services to small and medium-sized manufacturers throughout the state of California. CMTC's mission is to serve as a trusted adviser providing solutions that increase the productivity and competitiveness of California's manufacturers. CMTC operates under a cooperative agreement for the state of California with the Hollings Manufacturing Extension Partnership Program, MEP, at the National Institute of Standards and Technology within the Department of Commerce. For more information about CMTC, please visit www.cmtc.com. For more information about the MEP National Network or to find your local MEP center, visit www.nist.gov/mep.