How the Latest Baldrige Award Winners Manage for Innovation

The Baldrige Excellence Framework (which includes the Criteria for Performance Excellence) fosters an approach to innovation that is systematic and integrated throughout an organization.

Innovation, as defined in the glossary of the most revision of the Baldrige Excellence Framework booklet, means “making meaningful change to improve products, processes, or organizational effectiveness and create new value for stakeholders. Innovation involves adopting an idea, process, technology, product, or business model that is either new or new to its proposed application.”

This contrasts with a popular conception of innovation focused more narrowly on new products made possible by technological advancements. While it certainly includes “breakthrough” product changes as innovations, the Baldrige definition also encompasses discontinuous changes in any of an organization’s key processes and even in its structure or business model.

Underlining the importance of such significant changes in products, processes, and/or the business model that yield a discontinuous change in results and contribute to an organization’s long-term success, managing for innovation is one of the core values of the Baldrige framework. Successful organizational innovation, according to the Baldrige glossary, “is a multistep process of development and knowledge sharing, a decision to implement, implementation, evaluation, and learning.”

Given this definition, it follows that the Baldrige Criteria for Performance Excellence ask an organization to define its innovation process (“How do you manage for innovation”), making the question an overall requirement in the “Operations” category (i.e., the key question for item 6.1c). So how do high-performing organizations respond to this question? In other words, what do good-to-excellent innovation processes look like?

Consider the responses of the four organizations that most recently earned the prestigious Baldrige Award. The 2015 award recipients (honored at an April 2016 ceremony) are Charleston Area Medical Center Health System (a large health care organization), Charter School of San Diego (a K-12 education organization that is part of the county’s public school system), Mid-America Transplant (a nonprofit), and MidwayUSA (a small business and two-time Baldrige Award recipient). These Baldrige Award-winning organizations offer exemplary innovation processes for learning and inspiration from four different sectors.

Baldrige Program Director Emeritus Harry Hertz observes in his Spring 2016 “Insights on the Road to Performance Excellence” column that the 2015 Baldrige Award recipients “have demonstrated a new level of maturity and commitment to fostering innovation.” Hertz’s column is based on his attendance at multiple presentations of the four organizations at the Baldrige Program’s annual Quest for Excellence® Conference in April.

Hertz attributes the organizations’ success with innovation to their “leaders’ setting the environment and establishing formal innovation processes” so that “innovation has become truly embedded in the very core of how these organizations operate.” He also notes that “all four organizations clearly demonstrate the key ingredients for innovation: a supportive environment and intelligent risk taking.”

Fortunately, for those interested in learning from national role models identified through the Baldrige Award, application summaries for all award recipients are publicly available on the Baldrige Program’s website (on the data-rich award recipient page). Drawing from those posted documents, following are descriptions of the innovation processes of the 2015 recipients.

Charleston Area Medical Center (CAMC) Health System

CAMC Health System describes and depicts its Innovation Management System at 6.1c in its Baldrige Award application. The process begins with three key sources for innovation: strategic opportunities identified during the Strategic Planning Process, ideas that come from internal performance reviews, and unanticipated sources.

“Once analysis is completed and we determine through the use of intelligent risk criteria … that the strategic opportunity should be pursued,” states the organization, “we develop the implementation plan, seek approval from the appropriate decision-making group … , staff, and pilot the innovation” and “make financial and other resources available to pursue these opportunities through adjustments to budgets.”

The organization then monitors progress and either scales up and fully deploys innovations that meet key success measures or discontinues those that don’t meet targets as part of the ongoing review process in order to support higher-level opportunities. CAMC Health System depicts this innovation process in a flow chart (see graphic in this blog).    

Charter School of San Diego (CSSD)

According to its Baldrige Award application, CSSD’s innovation management process begins with determining strategic opportunities to pursue through consideration of internal and external success factors: “Once an idea or opportunity is received through the listening methods, senior leaders determine alignment to the vision, mission, and values; strategic initiatives, and the core competency,” states the organization. “A champion is identified based on his/her capability and capacity. Research is conducted and data [are] gathered through the [Process Design and Improvement System] PDIS. Senior leaders consider the data to determine if financial and other resources should be made available to support the idea or opportunity. Specific measures are identified to test the viability of the process.”

CSSD relies on effective financial management to make financial and other resources available to support innovation and risk taking. In addition to “responsible cash flow management, budget controls, revenue enhancement, and expenditure controls,” CSSD’s maintenance of reserve accounts is a “key component to financing innovation.” As it states in its application, CSSD has three reserve funds available, with one targeted to support innovation. CSSD makes decisions to discontinue pursuing an opportunity through analysis of measures during its PDIS process.

Beyond its process for managing innovation, as Hertz has pointed out, “CSSD was created with innovation at its core. Every system and process was a design innovation.” In addition, as CSSD shared at the Baldrige Program’s Quest Conference and Hertz subsequently describes, “The organization’s July strategic initiatives meeting includes an education reform and innovation plan for the short term (two years or less) and the long term.”

Mid-America Transplant

In its Baldrige Award application summary, Mid-America Transplant (MTS) states that “innovation is a core value and core competency at MTS and is embedded in the culture from the governance level with a Board of Directors vested in intelligent risk taking through the mission-driven workforce.”

As Hertz noted, at the 2016 Quest conference MTS CEO Diane Brockmeier described the five characteristics of her organization’s innovation culture as (1) visionary leadership with a sense of urgency; (2) transparent, two-way communication; (3) mission-driven, cross-functional teams; (4) a commitment to learning; and (5) effective external collaboration.”

MTS both describes and depicts its Improvement and Innovation Process (IIP; shown above) in its Baldrige Award application summary at 6.1c. “Innovation is initiated and managed through the IIP (Figure 6.1-2), which is an integral part of the [Operational Management Process] OMP, Learning and Development System] LDS, and the [Strategic Thinking Process] STP,” states the nonprofit organization.

According to MTS’s application, after discussion of an innovation originates in the STP, OMP, or LDS, a business plan is developed. The Leadership Team prioritizes plans in Strategic Discussions (SDs), and an innovation team composed of staff members from multiple departments may be formed. Innovation teams use performance improvement tools and data analysis to develop new processes to test and implement.

Plans determined to be aligned with the organization’s vision, mission, and values may be implemented in MTS operations during the “Deploy Plan” step of the IIP process; those determined to be intelligent risks are managed through a method called the MTS Incubator. After that, states MTS, “deployment and integration of plans include effectiveness checks and re-evaluation as needed.”

Embedded in the IIP is MTS’s Priority Matrix, which helps MTS identify intelligent risks and validate (at LT meetings) the scope, schedule, and resources of those it decides to pursue. Decisions to discontinue such opportunities are also evaluated through the IIP, states MTS. “The Effectiveness Check and Priority Matrix, key components of the IIP, allow for a systematic review of current projects as well as proposed projects and ensure the agility to enhance support for higher-priority opportunities.”
 

MidwayUSA

“We manage innovation by developing, categorizing, prioritizing, and implementing strategically important ideas,” states two-time Baldrige Award recipient MidwayUSA in its 2015 Baldrige Award application summary.

Among the means that the small business cites for developing innovation are strategic planning meetings, annual process reviews, and customer input methods, as well as numerous methods and meetings that focus on knowledge sharing, organizational performance (based on the Baldrige framework), and future opportunities.

MidwayUSA’s 2015 Baldrige application summary also references formal calls for innovation, including employee focus groups. The organization records all innovation ideas in its Performance Improvement System (PIS), which all employees can access to add ideas.

“We currently have over 3,400 ideas captured in our PIS in various stages of consideration and implementation,” states MidwayUSA’s application. “Since 2011 we have implemented over 2,000 ideas.”

MidwayUSA describes how it reviews and prioritizes innovative ideas to pursue through its strategic and departmental performance meetings as well as its Work Process Management Process and Continuous Improvement meetings. The company captures innovation ideas that it identifies as strategically important in its “Bucket List” in the PIS, and it reviews these ideas for consideration as action plans to be included in its strategic plan. 

How does your organization manage for innovation?