am 21. November 2015
The Malcolm Baldrige National Quality Award Criteria for the 2013-2014 Award described in the so called 'Baldrige Burger' consist of seven categories: Leadership; Strategic Planning; Customer and Market Focus;, Workforce Focus; Process Management; Measurement, Analysis, and Knowledge Management; Results. The scoring system to qualify for or win the award consists of 540 points as a maximum for the first six categories and 460 points for the Results category, thus results are the ultimate goal of doing business ' for further details I refer to Mark Graham Brown: How to interpret the Baldrige Criteria for Performance Excellence, 18th edition covering the 2013-2014 Award Criteria, published in 2014.
Graham Brown, who covers the Baldrige Award since 1990, provides a huge body of very intelligent questions which excellent companies should ask themselves to identify its strengths, weaknesses, opportunities and risks in the 7 categories
Fifty years ago Peter Drucker was already fully focused on Managing for Results. In his Introduction he positions his book as a 'What to do' book.
In 14 chapters he covers many important areas critical for business success leading to excellent results. Part of his Socratic approach are intelligent questions.
The following abstracts ' original Drucker quotes - should help the reader to get attracted to Peter Drucker's book and moreover to his oeuvre:
I Business Realities
There are three different dimensions to the economic task:
(1) the present business must be made effective;
(2) its potential must be identified and realized;
(3) it must be made into a different business for a different future. '
1. Neither results nor resources exist inside the business. Both exist outside. There are no profit centers within the business; there are only cost centers. '
2. Results are obtained by exploiting opportunities, not by solving problems. '
3. Resources, to produce results, must be allocated to opportunities rather than to problems. '
4. Economic results are earned only by leadership, not by mere competence. '
5. Any leadership position is transitory and likely to be short-lived. No business is ever secure in its leadership position. '
6. What exists today is getting old. To say that most executives spend most of their time tackling the problems of today is euphemism. They spend most of their time on the problems of yesterday. '
7. What exists is likely to be misallocated. '
8. Concentration is the key to real economic results. ' No other principle of effectiveness is violated as constantly today as the basic principle of concentration.
2 The Result Areas
' Products ' Markets 'Distributive Channels
3 Revenues, Resources and Prospects
' There is one exception here, however, one new concept requiring data rarely produced by the accounting system: the transaction.
4 How Are We Doing?
5 Cost Centers and Cost Structure
6 The Customer is the Business '
1. What the people in the business think they know about customer and market is more likely to be wrong than right. There is only one person who really knows: the customer. Only by asking the customer, by watching him, by trying to understand his behavior can one find out who he is, what he does, how he buys, how he uses what he buys, what he expects, what he values, and so on. '
2. The customer rarely buys what the business thinks it sells him. One reason for this is, of course, that nobody pays for a 'product'. What is paid for is satisfaction'.
3. A corollary is that the goods or services which the manufacturer sees as direct competitors rarely adequately define what and whom he is really competing with. They cover both too much and too little. '
4. Another important corollary is that what the producer or supplier thinks the most important feature of a product to be ' what they mean when they speak of its 'quality' ' may well be relatively unimportant to the customer. It is likely to be what is hard, difficult and expensive to make. But the customer is not moved in the least by the manufacturer's troubles. His only question is ' and should be: 'What does this do for me?' '
5. The customers have to be assumed to be rational. But their rationality is not necessarily that of the manufacturer; it is that of their own situation. To assume ' as has lately become fashionable ' that customers are irrational is as dangerous a mistake as it is to assume that the customer's rationality is the same as that of the manufacturer or supplier ' or that it should be. 'Not 'who pays' but 'who determines the buying decision' is the 'customer'. '
The minimum number of customers with decisive impact on the buying decision is always two: the ultimate buyer and the distributive channel. ' Each class of customer has different needs, wants, habits, expectations, value concepts, and so on. Yet each has to be sufficiently satisfied at least not to veto a purchase. '
How to see the Unexpected '
But the emphasis might be on different questions that are rarely asked. They are the questions that force us to see the unexpected.
1. Who is the non-customer, the man who does not buy our products even though he is (or might be) in the market? And can we find out why he is a non-customer? '
2. Equally important may be the question: What does the customer buy altogether? What does he do with his money and with his time?
3. What do customers ' and non-customers ' buy from others?
Understanding the customer
Finally, one should always ask the question: What in the customer's behavior appears to me totally irrational?
And what therefore is it in his reality that I fail to see? '
As these examples show, forcing oneself to respect what looks like irrationality on the customer's part, forcing oneself to find the realities of the customer's situation that make it rational behavior, may well be the most effective approach to seeing one's entire business from the point of view of market and customer. It is usually the quicker way to get outside one's own business and into market-focused action.
Marketing analysis is a good deal more than ordinary market research or customer research. It first tries to look at the entire business. And second, it tries to look not at our customer, our market, our products, but at the market, the customer, his purchases, his satisfaction, his values, his buying and spending patterns, his rationality.
7. Knowledge is the Business '
business is a human organization, made or broken by the quality of its people. Labour might one day be done by machines to the point where it is fully automated. But knowledge is a specifically human resource. It is not found in books. Books contain information; whereas knowledge is the ability to apply information to specific work and performance. And that only comes with a human being, his brain or the skill of his hands.
For business success, knowledge must first be meaningful to the customer in terms of satisfaction and value, Knowledge per se is useless in business (and not only in business); it is only effective through the contribution it makes outside of the business ' to customers, markets and end-uses. '
8 This Is Our Business
9 Building on Strengths '
There is need to concentrate scarce resources on the greatest opportunities and results. There is need to do the few right things and do them with excellence. '
What is important is not that General Motors, Edison, and the Rothshilds became great and strong; it is that they started near the bottom. Whether the penniless Prussian officer Siemens, or the half-deaf, almost unschooled errand boy Edison; the providnial awkward ' not to mention Jewish ' Rothschilds in a world of prejudiced, arrogant arristocrats, or the undeveloped Japanese clans of 1860; they all started with nothing, except a systematic approach. '
All three approaches have one thing in common: they build on strength; they look for opportunities rather than for problems.
10 Finding Business Potential
11 Making the Future Today
We know only two things about the future:
It cannot be known. It will be different from what exists now and from what we now expect. '
To try to make the future happen is risky; but it is rational activity. And it is less risky than coasting along on the comfortable assumption that nothing is going to change, less risky than following a prediction as to what 'must' happen or what is 'most probable'. '
The purpose of the work on making the future is not to decide what should be done tomorrow, but what should be done today to have a tomorrow. '
The starting point is the realization that there are two different ' though complementary ' approaches:
Finding and exploiting the time lag between the appearance of a discontinuity in economy and society and its full impact ' one might call this anticipation of a future that has already happened.
Imposing on the as yet unborn future a new ideal which tries to give direction and shape to what is to come. This one might call making the future happen. '
The resources that should be invested in making the future happen should be small, but they must be of the best. Otherwise nothing happens.
12 The Key Decisions '
Therefore one set of key decisions must be made for the business in all of its dimensions. These decisions are:
1. The idea of the business; 2. The specific excellence it needs; 3. The Priorities.
13. Business Strategies '
Whateveer y company's programme ' it must decide what opportunities it wants to pursue and what risks it is willing and able to accept.
It must decide on its scope and structure, and especially on the right balance between specialization, diversification and integration.
It must decide between time and money, between building its own or 'buying' ' i.e. using sale of a business, merger, acquisition and joint venture ' to attain its goals.
It must decide on an organization structure appropriate to its economic realities,its opportunites and its programme for performance. '
There are three kinds of opportunities: Additive; Complementary; Breakthrough. '
There are essentially four kinds of risks:
The risk one must accept, the risk that is built into the nature of the business.
The risk one can afford to take.
The risk one cannot afford to take.
The risk one cannot afford not to take.
Structure and Strategy
Structure, Professor Chandler demonstrates, follows strategy. Miss Penrose makes it equally clear that growth demands the right structure.
14 Building Economic Performance into a Business
The Work Plan '
Another necessary business practice is a systematic review of all products (or services), all activities, all major components of the business, every three years or so. This review first holds performance against expectations.
Conclusion; The Commitment