Achieving Organizational Excellence: An Introduction to the MN Council for Quality

1. Achieving Organizational Excellence:An Introduction to the MN Council for Quality Great Manufacturing Get TogetherJanuary 22, 2008

2. Today’s Discussion • Discuss the importance of alignment in organizations • Discuss how Baldrige has become a systemic management framework used to improve performance and optimize resources in any organization • Illustrate how some organizations are integrating Baldrige/MQA with Six Sigma, Lean, Scorecard • Summarize other improvement-related resources available through the Council

3. Where Do You Start? Improve productivity Improve HR selection Improve outcomes Improve employee turnover Improve margins Improve customer satisfaction Improve support processes Improve core processes Improve communication Improve knowledge management Improve employee training and development Improve complaint management Improve reward & recognition Improve quality Improve compliance Improve leadership Improve benchmarking Improve supplier management Improve results Improve competitiveness Improve accuracy Improve measurement Improve ROI Improve supplier performance Improve morale Improve decision making Improve goal-setting Improve use of data Improve ethics Improve planning Improve recruiting Improve cycle time Improve value creation processes Improve employee satisfaction

4. Mission Vision Mission Vision Alignment Baldrige Assessment Focusing Energy & Resources

5. Objectives of Using Baldrige • Identifies strengths and improvement opportunities • Facilitates improvement, alignment, and integration • Assists in delivery of value to stakeholders • Facilitates organizational and personal learning • Monitors progress over time

6. First, the Evidence… Source: Kevin B. Hendricks and Vinod R. Singhal, “Don’t Count TQM Out,” Quality Progress, April 1999

7. …First, the Evidence… Source: Q100 Index, Kopp Financial Advisors

8. Drivers Core Work Results Strategic Planning Workforce Focus Leadership Results Process Management Customer & Market Focus Measurement, Analysis, and Knowledge Management The Baldrige Framework The foundation of the assessment is the Malcolm Baldrige National Quality Award, which outlines validated Criteria that have been shown to produce excellent organizational results. The Criteria are divided into seven Categories which form an organizational system.

9. Criteria for Performance Excellence 1.1 Senior Leadership (70 points) Describe how senior leaders guide and sustain your organization. Describe your senior leaders communicate with staff and encourage high performance. Within your response, include answers to the following questions: Process SAMPLE a. Vision and Values (1) (2) (3) How do senior leaders set organizational vision and values? How do senior leaders deploy your organization’s vision and values through your leadership system, to all staff, to key suppliers and partners, and to students/stakeholders/patients/customers, as appropriate? How to their personal actions reflect a commitment to the organization’s values? How do senior leaders promote an environment that fosters and requires legal and ethical behavior? How do senior leaders create a sustainable organization? How do senior leaders create an environment for performance improvement, accomplishment of strategic objectives, innovation, and organizational agility? How do they create an environment for organizational and staff learning? How do they personally participate in the succession planning and the development of future organizational leaders? How do senior leaders communicate with, empower, and motivate all staff throughout the organization? How do senior leaders encourage frank, two-way communication throughout the organization? How do senior leaders take an active role in staff reward and recognition to reinforce high performance and a focus on the organization, as well as on stakeholders? How do senior leaders create a focus on action to accomplish the organization’s objectives, improve performance, and attain your vision? How do senior leaders include a focus on creating and balancing value for patients/students/customers/stakeholders in their organizational performance expectations? b. Communication and Organizational Improvement (1) (2)

10. The Criteria are Flexible • Is based on a set of validated, leading edge practices • Is applicable to any organizational entity – • manufacturing, service, health care, schools, non-profits, public sector agencies • Is scaleable – • can be used for very small or very large, complex organizations (or parts of organizations) • Encourages communication and knowledge sharing – helps build a common language

11. Category 2 -- Strategic Planning 2.1 Strategy Development 7 process or by improving cycle time. Metrics will be incorporated that assess participant contributions, and evaluate adherence to timeliness and the level of agreement on the financial projections in the 1998 planning process. Another improvement included the involvement of John Adams, a key physician from the University of Lakeland Hospital’s cardiac program, in Gemini’s planning process to ensure that clinical issues are addressed. 2.1a(1,2) The external and internal analysis is included in what Gemini refers to as Phase II of the Strategic Planning Process. This phase looks at external opportunities and threats as well as internal strengths and weaknesses. Figure 2.1-1 Strategic Planning Process Phase When What Who Evaluate previous yr’s process/ID improvements GBOD LT/Director of Planning Phase I -- Pre-Planning January • Meet customers, network, external mtgs., distrib. Quality/JCAHO info • Perform compet. analysis • Conduct survey/focus grps. LT MCO Consultant Supplier reps • Phase II -- Environmental • Analysis • External • Internal 4 Biannually Annually • Review results • Review results vs plan • SWOT analysis Branch managers LT/GBOD Planning Teams Ongoing Quarterly Annually Planning retreat: risk analysis, partner capabil’s; draft initial plan LT, Planning Team Phase III -- Strategic Plan Development September • Staff Feedback • Deployment Review/update plan; devlp forecasts/resource/ budget Branch mgrs, Segment Specialists October Review/modify budget; follow-up retreat (if nec.) LT, Planning Team November Approve budget; communicate to staff GBOD, all staff December Assessing Performance with the Criteria Conduct Site/ IP Session Prepare for Site Visit Initial Evaluation Prepare Prepare Full App or BEX Review Independently Reach Consensus Conduct Site Visit Conduct Imprmnt. Plng Session

12. Minnesota Quality Award • Although the primary goal is learning and improvement, we also recognize levels of performance excellence through the Minnesota Quality Award. • Four Award levels given for organizations that complete a site visit: • Commitment • Advancement • Achievement • Excellence • Through 2006, 88 organizations have received a level of recognition in the MQA

13. 8 Assess Performance We help organizations understand and prioritize their current strengths and improvement opportunities (and recognize excellence through the Minnesota Quality Award). Our Mission: Advancing Excellence Improve Performance We broker information, resources, knowledge, and best practices that can assist organizations in improving their performance and/or competitiveness.

14. Implementing Improvement Efforts • The Minnesota Council for Quality has developed four services to broker information, resources, knowledge, and best practices on organizational improvement • Improvement Clearinghouse • Consultant Referral Network • Performance Improvement Network • Partnerships/Alliances • Benchmarking (coming) 8 Assess Performance Improve Performance

15. Identify Improvement Financial Value Stream Mapping Eliminate Waste Empowered Teams 5S Kanban Kaizen Customer Process Strategy Eliminate Variation D M A I C Learning/ Innovation Monitor Progress Integrating Frameworks/Tools Baldrige Lean Six Sigma Scorecard

16. About the Speaker Brian Lassiter was elected president of the Minnesota Council for Quality in the summer of 2001.  Before his election, Brian held positions with the following organizations: Ian Alliott Consulting (Managing Director), Norstan Consulting (Principal Consultant), The St. Paul Companies (Corporate Quality Consultant), Price Waterhouse (Consultant), and Boatmen's National Bank (Quality Manager).  In these roles, Brian has worked with dozens of organizations in a variety of industries to help them improve their performance and competitiveness. Brian has served 10 years on the Board of Examiners for the Malcolm Baldrige National Quality Award (1998-2007), three as a Senior Examiner and the last four years as an Alumni Examiner.  He has also served as a Senior Evaluator for the Minnesota Quality Award (1996-97), served as a Judge for the Veteran’s Administration Baldrige-based Carey Award (2004-06), is on the Review Panel for the University of Minnesota Carlson School’s Juran Fellowship program (2003-07), and has served from 1995-2003 and 2004- on the Board of Directors for Goodwill/Easter Seals of Minnesota, currently serving as Vice Chair. He is Vice Chair on the Board of Directors of the Alliance for Performance Excellence, the national consortium of all state/local quality awards. He can be reached at Brian.Lassiter@councilforquality.org or 612-868-3519 (cell). Founded in 1987, The Minnesota Council for Quality is a non-profit corporation that advances improvement and performance excellence within organizations, individuals, and communities.  The Council helps leaders identify strengths and improvement opportunities and builds networks that bring information, resources, knowledge, and best practices to organizations desiring to improveFor more information, please visit www.councilforquailty.org or contact the Council at info@councilforquality.com.

17. THE BALDRIGE JOURNEY AT MATE PRECISION TOOLING • Getting Started, Developing Momentum and Insights Gained on the Journey • Great Manufacturing Get Together Presentation – 1/22/08

18. KEVIN NICHOLSON • President, Mate Precision Tooling • Undergrad Engineering Degree, University of Notre Dame • MMSE Degree, UST (1994) • Kellogg School of Management, KMI Program 2006/2007 • Industrial experience: 26 years in engineering, operations and general management

19. THE JOURNEY • Investigation, Education and System Selection -2001 • Getting Started -2002 • Developing Momentum – 2003/2004 • Minnesota Quality Award (MQA)- 2005 • Lessons Learned • 2008 and Beyond

20. OBJECTIVES USING BALDRIGE • Identifies strengths and improvement opportunities • Facilitates improvement, alignment, and integration • Assists in delivery of value to stakeholders • Facilitates organizational and personal learning • Monitors progress over time

21. Drivers Core Work Results Strategic Planning Workforce Focus Leadership Results Process Management Customer & Market Focus Measurement, Analysis, and Knowledge Management THE BALDRIGE FRAMEWORK The foundation of the assessment is the Malcolm Baldrige National Quality Award, which outlines validated Criteria that have been shown to produce excellent organizational results. The Criteria are divided into seven Categories which form an organizational system.

22. SYSTEM SELECTION – WHY BALDRIGE? • Business excellence model will help all aspects of the business improve • Recognizable • Holistic Approach • Non-Prescriptive, an open book test • Model has improved over the last 19 years • Mate can focus on just a few areas initially • Structured, but not excessive

23. GETTING STARTED – SELF ASSESSMENT • Each Leadership team member assigned to champion one Baldrige category • Goal: answer many Baldrige questions, begin to identify strengths and OFI • First draft critiqued by Leadership team • Critique Process: Three very long meetings, category champion presents to Leadership team

24. GETTING STARTED – SELF ASSESSMENT • First draft critique incorporated into the “final” self assessment document • Result was a 44 page self assessment document (Baldrige Application) • Concluded that we needed to update our strategic plan • Identified 160 OFI’s

25. GETTING STARTED – PROJECT SELECTION • Selected 19 projects to focus on, some already active (7) or partially complete • A mix of small and not so small projects • Improve Communication – 6 • Improve Planning - 2 • Improve Training – 2 • Improve Quality, Delivery & Reduce Cost – 4 • Market and Customer Initiatives - 5

26. DEVELOPING MOMENTUM • Quarterly Baldrige meetings with the Leadership team used to push projects • Monthly project updates published • Commitment improving as projects are completed and benefits realized • Momentum developed as projects completed and our understanding improved

27. BALDRIGE & STRATEGIC PLANNING • Need for strategic planning identified as part of Baldrige process • Completed 1Q04 • Baldrige application document helped external facilitator get up to speed • Added 6 major projects to the Baldrige list as a result of strategic planning

28. MINNESOTA QUALITY AWARD – THE NEXT STEP • Next step in the Baldrige journey was applying for the MQA – began 4Q04 • Leadership team applied 1,500 hours of work (11/04-4/05) – 2X self assessment • Similar application development process: wrote 3 drafts, more in depth • Consulting help: 50 hours – told us what questions were not answered well and wrote application in “one voice”

29. MQA SITE VISIT • Site visit preparation modest: two slide presentations to the entire workforce • Leadership team put in 10 hours each before the visit, preparing documents • Six trained evaluators spent 3 FULL days at Mate, total of 1,000+ hours of evaluator time studying Mate!

30. MQA OUTPUT • Deeper Baldrige understanding • Deeper Baldrige commitment @ executive & manager level • “Best thing we ever did” • “Both a lever and a discipline to get us to WCM status”

31. MQA FEEDBACK REPORT • Received 40 days after site visit • Lists 90 strengths and 54 OFI • Mate agreed with 95% of the feedback • Major input into 2006 business plan • Launched 17 projects to address OFIs and/or enhance strengths

32. BALDRIGE AS A CHANGE PROCESS • Helps organize change, use Baldrige framework • Asks some tough questions, need to be honest • It helps being new, to drive change • Benefit – Organization recognized need for change

33. BALDRIGE AS A MANAGEMENT SYSTEM • Excellent framework established • Holistic view of the organization provided • Drives you to set up world class systems • Need good project management, discipline and follow through

34. LESSONS LEARNED • Tendency to work in functional silo (C/A create teams to address categories) • Self assessment critique was a good process to interject other viewpoints and improve self assessment rigor. • Allocation of 15 hours for critique –too short • Advantage to have someone new that is integral to the process

35. LESSONS LEARNED • Benefit of committed mgmt team, no 2nd agendas, good Baldrige support • Self assessment (700 hrs) followed by MQA (1,500 hrs) was a good sequence • Self assessment 1H02, strategic planning 1Q04 and MQA 1Q05 was good timing for our organization • External resource was a good investment

36. LESSONS LEANRED • How robust is a business process? Will find differing views within an organization • Slow progress- managing too many projects • Slow progress – slow to add resource, especially in 2002/2003 • Slow progress -immature business processes result in slow execution speed • Coming up the Baldrige understanding curve • Difficult to identify STOP activities

37. LEADERSHIP SYSTEM IMPROVEMENTS • System of meetings • Annual budgeting process & sharing of financial information • Annual G&O setting process • Performance appraisal & development • Better action plan development • Most elements are new or strengthened – supported with extensive new BP training

38. ORGANIZATIONAL ALIGNMENT • Central Baldrige focus helps ensure alignment • Baldrige is the Brains, Lean is the Muscle • “Good to Great” became the “brand” - helped us place our Baldrige effort in context • Second Baldrige application development process helped improve understanding and commitment

39. HOW TO ENSURE ALIGNMENT • Deliver consistent message • Ensure a common understanding of purpose and goals: BSC, G&O, system of meetings • Timely updates of performance to goals • Development of effective leadership system • Philosophical alignment • Company size and culture a Mate advantage

40. RESULTS - BETTER SYSTEMS • Vendor report card/supply chain mgmt • Team level metrics established, published weekly • Quarterly financial analysis of spending by commodity/service • Capital budget process established • Machine capacity analysis completed • Customer returns analysis strengthened

41. RESULTS - BETTER SYSTEMS • Regional sales mix analysis • On line training for field sales • Late delivery analysis • Better organizational alignment • More holistic view of organization & goals, as communicated by balanced scorecard

42. Balanced Scorecard

43. Balanced Scorecard

44. 2007 WORK & 2008 PLANS • Externally facilitated sales planning in 2006 (instead of strategic planning) • Working 19 Baldrige improvement projects • Explain/understand feedback report to help drive alignment (2006 and 2007) • Completed strategic planning in 2007, seven initiatives identified • Will develop Baldrige application in 2008 and submit for MQA

45. Baldrige – A Journey of Introspection and Discovery Good to Great