Pat Townsend & Joan Gebhardt
EXCLUSIVE ONLINE COLUMNISTS

The booming U.S. economy continues to exceed one economist's predictions after another. A growing number of individuals and groups claim credit--or are receiving credit--for the unparalleled number of consecutive months of growth, including Alan Greenspan, chairman of the Federal Reserve; the Internet; and politicians. We propose that due credit for the nation's economic health be given to the Malcolm Baldrige National Quality Award, which has received scant attention in the national press.

The Baldrige Award became law in August 1987, with the first awards presented in October 1988 at the White House by President Ronald Reagan. Public Law 100-107, which established the Baldrige, deserves occasional rereading by anyone with aspirations to be a quality professional. Point No. 6, for instance, states that "in order to be successful, quality improvement programs must be management-led and customer-oriented, and this may require fundamental changes in the way companies and agencies do business."

The heart of the Baldrige law includes a list of the ways in which a "national quality program of this kind in the United States would help." They include: "providing an example to others"; "establishing guidelines and criteria that can be used by business, industrial, governmental and other organizations in evaluating their own quality improvement efforts"; and "providing specific guidance for other American organizations that wish to learn how to manage for high quality by making available detailed information on how winning organizations were able to change their cultures and achieve eminence."

The determination to make lessons learned by Baldrige winners available to all organizations differentiated the Baldrige from all other business awards or designations. The intent was to improve the national economy. And it worked.

The early Baldrige winners, in particular Motorola in 1988, Xerox in 1989 and FedEx in 1990, set the standards for sharing information. Each not only taught thousands of classes to all comers, they also gave strength and credibility to phrases that have since moved into the mainstream of U.S. business vocabulary. Partnering, benchmarking, Six Sigma, customer-driven quality and total customer satisfaction all have Baldrige roots.

"Mainstreaming" the Baldrige was one of the original goals of Dr. Curt Reimann, the first director of the Baldrige Award Program. It can be argued that five doctors contributed greatly to the health of the U.S. economy, even though they worked independently of each other and were not all necessarily "Baldrige fans." Three of them--Doctors W. Edwards Deming, Joseph M. Juran and Armand V. Feigenbaum--laid the groundwork for the quality movement through their work in Japan and, subsequently, the United States. The fourth, Dr. Tom Peters, gave it life by convincing U.S. businesspeople that they, too, could excel. The fifth, Dr. Reimann, gave the quality movement longevity by making it an integral part of U.S. business strategy and leading the effort to make quality more than just an addition to business but, rather, the way business is done.

The common vocabulary and framework for ideas provided by the Baldrige and its many clones at state, county, city and corporate levels made it possible for people from disparate organizations to talk with each other. You no longer had to try to divine what your successful competitor was doing in order to better your own organization; you could turn to Baldrige winners and Baldrige applicants to learn. One well-conducted self-assessment using the Baldrige could establish an organization's improvement plans (and strategic plans, for that matter) for years to come, without actually applying for the Baldrige.

One of the many under-appreciated aspects of the Baldrige has been the education of thousands of Baldrige (and Baldrige clone) volunteers. Having once been immersed in the Baldrige philosophy and lessons through the Baldrige examiner classes and subsequent work-evaluating applications, a businessperson's outlook on how work should and can be done alters permanently.

The financial success of Baldrige winners is, of course, not up for serious debate. As a follow-up to Juran's casual statement that he would be willing to bet that Baldrige winners did well in the stock market, the Baldrige Index was established. Each time the Baldrige winners are announced, a hypothetical $1,000 is invested in any publicly traded winners (or, if appropriate, their parent company). The most recent Baldrige Index shows that while the Standard & Poor's 500 achieved a 146.9-percent return since 1988 (when the first Baldrige winners were announced), the Baldrige whole-company winners achieved a return of 394.5 percent. Expanding the database to include the parent companies of any subsidiaries that won, the return is 362.3 percent. Want a stock tip? Buy Baldrige.

Part of the Baldrige's credibility comes from its own yearly reviews and continual improvement. Its greatest single strength, however, may be the nonprescriptive nature of its criteria. Rather than requiring that an organization match its performance to some standards established by someone else in the past, the Baldrige urges applicants to look to the future, to consciously be ready to react to what may come--and to be able to articulate those plans--rather than explain how it will catch up with old rules. It is not by chance that the flexibility and continual investigation of the future called for by the Baldrige are the hallmarks of the current economic boom.

Ironically, the success at mainstreaming quality concerns and methodology has also diluted the quality message to a degree, making it possible for some senior managers to pay less attention to the implementation of quality initiatives than they might have in the past. However, there can be no doubt that the Baldrige, by showcasing the truly stellar companies in the U.S. economy, giving them a credible platform from which to present their lessons, and providing U.S. businesses both the occasions and the means to communicate with each other, has been a major player in the evolution of the national economy in the late 20th century.

There is no way to disentangle the Baldrige's influence from everything else that has resulted in the current economy. But it should never be forgotten that an award that was carefully designed to be a tool for teaching has been a major contributor to the U.S. standard of living.

About the authors

Pat Townsend and Joan Gebhardt have written more than 200 articles and four books: Commit to Quality (John Wiley & Sons, 1986); Quality in Action: 93 Lessons in Leadership, Participation, and Measurement (John Wiley & Sons, 1992); Five-Star Leadership: The Art and Strategy of Creating Leaders at Every Level (John Wiley & Sons, 1997); and Recognition, Gratitude & Celebration (Crisp Publications, 1997).