Creating Global Competitiveness Initiatives Using the Malcolm Baldrige National Quality Award—The Tennessee Experience
Summarized from the SAM Conference paper by: Robert R. Bell, Brian D. Bowman, Cass L. Larson, Curt W. Reimann
Introduction: Restructuring for Global Competitiveness
A new reality faces many firms throughout the United States. To be successful, a firm must be competitive against market entrants from throughout the world. While price remains an important factor for most sectors of the economy, competitive factors like global alliances, time to market, and international quality registrations such as ISO shape the strategic thinking of many organizations. Firms that once experienced competition only from local or regional organizations, perhaps within one state, now face pressures from businesses throughout the world. Communities that felt secure in retaining companies that produced jobs for the local workforce now see many of those jobs going "offshore" or to Central or South America. States that experienced new job growth from company transfers within the U.S. are now competing for job creation opportunities both with other states and with countries throughout the world. Communities and corporations have both had to restructure for global competitiveness.
In 1995, economic development officials in the state of Tennessee began to discuss initiatives that would enhance the global competitiveness framework of businesses within the state. They hoped to retain jobs that already existed in Tennessee industry and create new jobs through increased global awareness and competitiveness. The planning group included individuals from the state’s Department of Economic and Community Development, the Department of Labor, faculty from Tennessee Technological University, and board members from the Tennessee Quality Award (TQA). Tennessee’s quality award, patterned after the Malcolm Baldrige National Quality Award, has become one of the most successful state quality programs in the U.S., involving well over 500 organizations, having a statewide impact on nearly 150,000 workers. Because of the success of TQA, economic development leaders felt the same process could be used to deploy a global awareness and international competitiveness initiative. The state entered a partnership with the Appalachian Regional Commission, and planning for the globalization initiative began in 1996. Pilot studies using the newly developed globalization criteria were completed in 1997.
Why use a quality award for the economic development and globalization vehicle? The last decade has seen a major evolution of the concept of quality. While in the past many individuals thought of quality primarily in process terms, today the quality framework is more holistic and strategic, with a major focus on performance excellence in markets and customer satisfaction. Tennessee’s quality award framework also provided an emphasis on growth and improvement, making it a solid means of deploying the new economic development initiative.
Creating the New Criteria/Modifying the Standards
The global competitiveness initiative was deployed as an independent category added to the existing seven categories in the MBNQA and TQA frameworks. The export initiative was created as an eighth set of criteria—Category 8, "Global Market Development and Competitiveness." Scoring and evaluation of this category were piloted by several Tennessee businesses separate from the regular TQA process. The criteria team felt that the inclusion of global factors into the existing framework would alter the intent of the well-developed MBNQA, namely promoting overall performance excellence.
The initial steps in the process of developing Category 8 involved an in-depth study of the MBNQA criteria as well as national and international quality standards, tools, and processes. From this comprehensive examination of quality frameworks and business success factors, several key issues for international quality competitiveness were derived as follows:
- Businesses must be aware of global quality standards for their industry and business processes to develop and maintain quality competitiveness in the era of globalization. Awareness of best practices can improve businesses even if the threat of global competition is currently low.
- Firms must take steps to prepare for increased competition in their local markets from new or expanding global entrants whose quality exceeds local standards and who have well-developed competitive practices.
- Businesses should prepare for continuing globalization by developing and maintaining quality standards and processes that will allow the businesses to expand and compete in global markets in order to create long-term growth.
- Businesses at an advanced level of participation in global markets should have performance that compares favorably with competition in such markets.
The Category was developed using these identified key issues for quality competitiveness using the approach, deployment, and results paradigm of the MBNQA. After composition of the initial draft of Category 8, the process moved forward to many reviews including discussion, debate, additional research, and revisions. A cross-section of business leadership in Tennessee was used to help fine-tune the final pilot criteria.
Category 8 builds upon the established Baldrige framework within three Items developed from the identified key export factors:
- Item 8.1- Leadership, Strategic Planning, and Customer Market Focus for Global Business Development
- Item 8.2 -Global Readiness
- Item 8.3 -Global Market and Competitiveness Results.
The first Item mirrors Categories 1, 2, and 3 of the MBNQA framework. It emphasizes how a global framework is embedded in the leadership system of the company, how the company considers global information in its’ strategic planning, and how the organization approaches and understands, global customers, competitors and markets.
Item 8.2 relates to Categories 4, 5, and 6 of the Baldrige framework. It examines how the company selects and uses global business information to identify opportunities, enter markets, and strengthen its position in existing markets. This Item also examines workforce development, looking at how the company develops and reinforces a global perspective in all of its human resource strategies. Finally, the Item reviews how the company uses process management to understand and master global market requirements.
The final Item is results oriented. The company is asked to share results of performance and trends in improvement in international markets with regard to customer satisfaction, market performance, financial results, human resources, and operational performance. These results should relate to how the company has adapted to changing global market and competitiveness issues and include comparisons to global competitors.
Now that the pilot project has been successfully completed, the Category 8 criteria will be incorporated as an elective part of the Tennessee Quality Award for 1998. The next major step in deploying the global awareness/competitiveness project in Tennessee will be educational in nature. In partnership with the Center for Strategic and International Studies in Washington and the Virtual Trade Mission program, new initiatives will be launched in educating:
- TQA examiners for the international component of the quality award,
- business leaders and employees in organizations moving through the award process, and
- high school students in the state.
These initiatives will enhance learning of quality and export requirements so that Tennessee business can continue to succeed in the changing global marketplace.