INTRODUCTION

Baldrige? Six Sigma? Lean? Balanced Scorecard?We don’t have time for all of these initiatives! Let’sjust pick one and go with it!” How many times haveyou heard (or perhaps even said) something similar tothis? The statement suggests the initiatives are equiv-alent. They are not. As has been discussed earlier inthis book, the Baldrige Criteria for PerformanceExcellence represent a comprehensive set ofprocesses that organizations should have in place inorder to optimize performance. Six Sigma, Lean,Balanced Scorecard, and other initiatives representsome tools, albeit powerful tools, that organizationscan use to enhance performance

The use of these tools in isolation, without regardto the needs of the entire management system, willnot produce optimum benefits or optimum perfor-mance for the organization. Many times when theconcept of using the Malcolm Baldrige Criteria forPerformance Excellence is discussed, Six Sigma orLean Thinking are brought up as alternative manage-ment systems. Many articles and books tout SixSigma, Balanced Scorecard, or Lean Thinking as themost effective management system in the history ofbusiness management. Those opinions are not sup-ported by data. Six Sigma tools, properly imple-mented, do produce great results, but the tool doesnot cover all of the elements needed to optimize orga-nizational performance. Six Sigma, Lean, theBalanced Scorecard and other improvement method-ologies can best be viewed as tools that help an orga-nization drive toward performance excellence;however, each can become even more valuable if theyare used together within the context of a Baldrige-based integrated culture of performance excellence.The use of these tools as part of an integratedapproach to maximizing performance, whichBaldrige represents, is the best way to drive toward

better results. One is not a substitute for the other –they align well with each other and mutually helpdrive toward improved business results

Baldrige Overview

The Malcolm Baldrige Criteria for PerformanceExcellence have the over-arching goal of strengthen-ing U.S. competitiveness in an increasingly globaland competitive marketplace. The Baldrige Criteriafocus on helping organizations use a focused and sys-tematic approach to performance management thatresults in:

• Delivery of ever-improving value to customers,contributing to marketplace success

• Improvement of overall organizational effective-ness and capabilities

• Organizational and personal learning

The Criteria are based on a set of Core Valuesand Concepts (Figure 1) that have been found to beintegral beliefs and behaviors in high-performingorganizations.

1

Alignment of Baldrige with Six Sigma,Lean Thinking, and Balanced Scorecard

Prepared by Paul Grizzell and Mark Blazey

Visionary Leadership Managing for Innovation

Customer-DrivenExcellence

Management by Fact

Organizational andPersonal Learning

Social Responsibility

Valuing Employees andPartners

Focus on Results andCreating Value

Agility Systems Perspective

Focus on the Future

Summary of Baldrige Core Valuesand Concepts

Figure 1 Baldrige Core Values and concepts.

These Core Values and Concepts are the underpin-nings of the systematic approach and deploymentmethods used to drive toward improved businessresults within organizations using the Baldrige Criteriaas their management system. (See pages 27-35 for acomplete description of Core Values and Concepts.

The Baldrige Criteria helps an organization ensurea systematic approach to improvement by developingapproach and deployment methodologies forCategories 1-6, and looking for how these approachand deployment methods are linked to improved busi-ness results. The Baldrige Criteria are nonprescriptive– they don’t tell an organization how to do something,they tell what it should be doing, then leave it to theorganization to determine the processes that best fit theorganization, its culture, and goals.

Some managers see the Baldrige Criteria only asan award process; however, in reality, most organiza-tions that use the Baldrige Criteria never apply for anaward at the national or state level. Thousands of orga-nizations use the Baldrige Criteria as a managementmodel or assessment tool to gauge the maturity andeffectiveness of their own management system. TheCriteria, available in Business, Education, and HealthCare versions, are very flexible. This is demonstratedby the diversity of organizations that have used theCriteria to move to performance excellence. Theseinclude a high-school classroom, churches, internalsuppliers, nonprofit agencies, and others who have tai-lored the model to their particular application.

Six Sigma Overview

Six Sigma is an extremely effective tool for system-atically attacking the highest priority production andsupport/functional problems within an organization.A goal of Six Sigma is to reduce defects variationwithin a work process. It is not, however, the best toolto apply to every problem. Six Sigma requires a sig-nificant investment in up-front training, time and peo-ple to carry out the projects, and leadershipcommitment to project reviews. Some problems maynot require Six Sigma’s highly intensive methodol-ogy. Effective leaders separate the problems thatdeserve a Six Sigma approach from those requiring adifferent methodology.

General Electric has been recognized as a leadingexample of a corporation that has used Six Sigmaeffectively. Several of the key reasons that Six Sigmahas been so successful at GE have nothing to do withthe Six Sigma process, but are the “enablers” that havedriven that success. Several of those enablers include:

• Consistent leadership that drives the organiza-tion to quantifiable results

• A culture that is relentless in driving towardcontinuous improvement

• Effectiveness in committing the resources that increase the chances of a successful project outcome.

Baldrige and Six SigmaAlignment

An example of the Six Sigma Define-Measure-Analyze-Improve-Control (DMAIC) problem-solvingprocess is provided in Figure 2. It is easy to see howthis systematic improvement process can help an orga-nization meet some of the requirements of the BaldrigeCriteria in Category 6, Process Management, forimproving “…value creation processes [Item 6.1] andcertain support processes [Item 6.2] to achieve betterperformance, to reduce variability, to improve prod-ucts and services, and to keep the processes currentwith business needs and direction.” In addition, SixSigma encourages a focus on meeting customerrequirements [Baldrige Category 3], a leadership-dri-ven initiative [Baldrige Category 1], alignment ofimprovement projects to the organization’s strategy[Baldrige Item 2.2a(1)], effective development andtraining of human resources [Baldrige Item 5.2], anddata-driven decision making [Baldrige Category 4].

Six Sigma can be used to drive deep into rootcauses to solve the organization’s highest impactproblems, consistent with the requirements ofBaldrige Category 6, Process Management. Effectiveorganizational alignment with the Baldrige Criteriacan help focus the positive impact of Six Sigmaimprovement initiatives.

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Baldrige as an Aid to Six SigmaProject Selection

A key concern with the Six Sigma process is how tochoose the appropriate projects on which to spendvaluable time and resources. An article by Ronald D.Snee in the March, 2001 edition of Quality Progress(published by ASQ, Milwaukee, WI) was titled“Dealing With the Achilles’ Heel of Six SigmaInitiatives: Project Selection is Key to Success.”When Six Sigma is approached from a Baldrige man-agement system perspective, areas of focus havealready been identified in a variety of ways:

1. Completion of an Organizational Profile thatwalks the organization through an overview ofthe organizational environment in which it oper-ates, key relationships with customer groups andsuppliers and partners, the competitive environ-ment in which it operates, the strategic chal-lenges it faces, and its performance managementsystem. This Organization Profile is the firststep in moving forward with a Baldrige assess-ment; however, its greatest value may lie in itsability to move the entire organization to a com-mon understanding of its culture, its customers,its strategic challenges and opportunities. Key

Alignment with Six Sigma, Lean Thinking, and Balanced Scorecard3

Define

Measure

Analyze

Improve

Control

1. Establish the focus

2. Examine the current situation

3. Analyze the causes

4. Act on the causes

5. Study the results

6. Standardize thechanges

7. Draw conclusions

Review initial project charter

Form the team

Identify and describe the performance gap

Verify the performance with data

Complete charter

View the process in detail

Describe the current situation in detail with data

Develop strategies

Brainstorm and prioritize root causes

Use data to verify the causes

Select root causes to address

Brainstorm possible actions

Select actions to take

Develop action plans

Implement actions on a small scale

Study the results and modify action plans

Implement actions on a large scale

Standardize successful actions

Develop a process management plan

Identify benefits, difficulties, and lessons learned

Discuss future plans

Six Sigma DMAIC Problem Solving Process

Project objective

Strategies and strategy measures

Root causes

Actions

Revised action plans

Control plan

Project summary

Phase Step Primary Activities Primary Output

Figure 2 Six Sigma DMAIC Problem Solving Process.©Used with permission of Process Management Group, Minneapolis, MN

Insights to Performance Excellence 2006

Business Factors naturally “fall out” of theOrganizational Profile, providing a prioritizationcapability that aligns Six Sigma efforts aroundthe highest priorities of the organization.

2. As the organization becomes more mature andassesses its management systems against theBaldrige Criteria, it is able to identify andaddress key strengths and opportunities forImprovement that relate directly to its key suc-cess factors. The organization may decide to par-ticipate in a state- or national-level Baldrigeassessment or develop a Baldrige-based in-houseassessment program. The more formal state andnational Baldrige assessments make use of inde-pendent, externally trained examiners to assessthe organization. The resulting feedback reportidentifies the most critical strengths and opportu-nities for improvement based on the level ofdevelopment or maturity of the organization.

OVERVIEW OF LEAN THINKING

Lean Thinking (or Lean Manufacturing, or simplyLean) can best be described as the relentless pursuit,identification, and elimination of waste in all businessprocesses. Business processes over time tend tobecome fat, boated, and inefficient. Steps are added toprocesses and become ingrained, after which othernew steps are added. Too soon, unnecessary processsteps become “the way we do things” and the problemsbecome invisible to workers and managers. Without aperiodic re-evaluation of each process step’s value,increased bloating and inefficiency is inevitable.

Lean Thinking revolves around developing teamsto identify, then reduce waste through strategies suchas workplace organization, mistake-proofing, andvisual management. In addition, there is a focus onreducing raw material, work in process, and finished-goods inventory through Just-in-Time production(another improvement tool). Lean Thinking is a moreintuitive improvement process than Six Sigma, requir-ing less in-depth training. This allows more extensivedeployment of Lean Thinking training to a broaderemployee base.

Value Stream Mapping

Lean Thinking begins with developing Value StreamMaps that describe and document the “current state”of the most important processes. Steps in these mapsare categorized by value of the steps from the view-point of the customer: value-added, non-value-addedbut necessary, and non-value-added and unnecessary.A “future state” map is then developed to show whatthe process would look like if identified waste wereeliminated. Various Lean tools are used to help con-vert the process to the future state.

Workplace Order, Safety, and Cleanliness

Another tool integrated into Lean Thinking is “5S.”5S was developed as part of the Toyota ProductionSystem. Toyota was the originator of many of theinnovative Lean Thinking concepts. 5S stands for thefollowing, translated from the Japanese:

1. Seiri – Sort2. Seiton – Set in order3. Seiso – Shine4. Seiketsu – Standardize5. Shitsuke – Sustain

A key to 5S workplace order is “a place foreverything and everything in its place.” This simpleconcept ensures that there is a designated area foreach tool, each cart, each item used in production.This minimizes time wasted looking for misplaceditems, reduces worker frustration and productiondowntime when materials are not ready for use, andhelps drive safety in the workplace by eliminating orminimizing workplace hazards.

Just-in-Time (JIT) Production

Products in a Lean organization are produced to customer demand rather than at capacity of the pro-duction line. This is referred to as “takt time,” (takt isGerman for musical meter) in which product is pro-duced to the “drumbeat” of customer demand. JITproduction helps minimize machine set-up changes,work-in-process, and finished-goods inventory. Inaddition, JIT production frequently reduces rawmaterial inventory by setting up JIT raw materialdelivery by suppliers.

4

Empowered Teams

A key to the success of Lean initiatives is the involve-ment of all employees. The involvement of employeeswho work in the process being improved has beenshown to increase employee engagement and improvethe effectiveness of decision making. Recognizingthat value in the customer’s eyes is created in the pro-duction of a product or service, many fully deployedLean initiatives physically move traditionally “frontoffice” functions such as purchasing and engineeringto the factory floor to ensure that resources are avail-able to “support the line” at all times.

The use of empowered teams strongly supportsthe Baldrige Item 5.1 Work Systems area to addressof Organization and Management of Work in whichthe organization is required to describe how work andjobs are organized to promote cooperation, initiative,empowerment and innovation, as well as how worksystems capitalize on the diverse ideas and thinkingof employees.

Visual Management

Visual management ensures that performance infor-mation is available to workers on a timely basis. Thisvisible performance feedback gives empowered work-ers immediate feedback on performance, allowingthem to have input into the worker’s/team’s ability tomeet goals. Visible scorecards posted in work areasare a common visual management method.

Although the concepts of Lean Thinking are mosteasily understood and applied in manufacturing, Leancan be a useful tool for all processes within an orga-nization. Lean can be used to eliminate waste inadministrative processes (for example, reducing timeto generate an invoice), human resources (reducingtime to fill open positions), and sales (reducing thetime of the sales cycle). Lean is one way of imple-menting the Baldrige requirement of evaluating andimproving all management processes in all sixProcess categories.

Baldrige and Lean Thinking Alignment

Lean Thinking and Baldrige are aligned in multipleBaldrige categories. As with Six Sigma, it is easy tosee how Lean Thinking helps address the areas toaddress in Category 6 - Process Management as an

organization works to improve its “…value creationprocesses (Item 6.1) and certain support processes(Item 6.2) to achieve better performance, to reducevariability, to improve products and services and tokeep the processes current with business needs anddirection.” Lean Thinking also encourages a focus onidentifying value in the eye of the customer, thenbuilding and improving those value-creatingprocesses (Baldrige Category 3), ensuring a leader-ship-driven initiative (Baldrige Category 1),employee involvement in process improvement in amanner that supports employee motivation (BaldrigeItem 5.2), and making needed data and informationavailable (Baldrige Item 4.2). Components of LeanThinking support Baldrige Item 5.3’s WorkEnvironment area to address of ensuring and support-ing workplace health, safety, security and ergonomicsin a proactive manner. In addition, Lean can con-tribute to increasing employee well-being and satis-faction and motivation (5.3b(1). As with Six Sigma,effective organizational alignment around theBaldrige Criteria can help drive the success of LeanThinking improvement initiatives.

Overview of Balanced Scorecard

Today’s Balanced Scorecard is a tool that derivesfrom the principles in the original Baldrige Criteriaof 1988. Namely, that effective leaders take a bal-anced look at key results measures of an organizationrather than rely too much on financial measures,which provide an historical look at organizationalperformance. Accordingly, the basis for this tool isthat business results are integrated – that leadersshould not view one measure in isolation withoutacknowledging the relation to other results. ABalanced Scorecard looks at four “perspectives” ofthe business:

• Financial: “To succeed financially, how shouldwe appear to our shareholders?”

• Customer: “To achieve our vision, how shouldwe appear to our customers?”

• Internal Business Processes: “To satisfy ourshareholders and customers, at what businessprocesses must we excel?”

Alignment with Six Sigma, Lean Thinking, and Balanced Scorecard5

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• Learning and Growth: “To achieve our vision,how will we sustain our ability to change and improve?

Objectives, measures, targets, and initiatives aredeveloped for each of the identified perspectives.

The scorecard balances leading and lagging per-formance indicators as Figure 3 indicates. The mostlagging indicator is financial. For example, financialresults reflect all of the errors, satisfied customers,lost customers, production efficiencies and ineffi-ciencies, waste, employee motivation, morale, andskill (or lack thereof) that exist in the organization.

An unbalanced scorecard (Figure 4) typicallylooks extensively at financials as the driver of orga-nizational priorities, often to the exclusion of themore predictive indicators such as internal businessprocesses and learning/growth. Relying too much onfinancial indicators to drive decisions is comparable

to driving an interstate highway by only looking inthe rear-view mirror. The scorecard is consideredunbalanced as Figure 4 demonstrates.

A properly developed Balanced Scorecard alignsclosely with the Results category of Baldrige (SeeFigure 5). A well-developed Balanced Scorecardshould align with the results expected in BaldrigeCategory 7 (which are driven by key processes inBaldrige Categories 1-6).

Baldrige and Balanced Scorecard Alignment

The Balanced Scorecard is a tool by which an orga-nization can measure its progress toward strategicand operational activities. The Balanced Scorecardaligns with the six Results categories of Baldrige:

The Balanced Scorecard brings various perfor-mance measures together in a manner that allows theorganization to recognize and address linkages

InternalBusinessProcess

Learningand

GrowthCustomer Financial

Leading Lagging

InternalBusinessProcess Learning

andGrowth

Customer

Financial

Figure 3 Balanced Scorecard or leading and lagging indicators.

Figure 4 Unbalanced scorecard emphasizing lagging indi-cators.

Figure 5 Baldrige-balanced scorecard alignment.

Baldrige Results Category Balanced Scorecard Perspective

7.1 Customer-Focused Outcomes Customer

7.2 Product and Service Outcomes Customer-Valued Product and ServiceFeatures (part of customer)

7.3 Financial and Market Outcomes Financial

7.4 Human Resource Outcomes Learning and Growth

7.5 Organizational Effectiveness Outcomes Internal Business Processes

7.6 Governance and Social Responsibility Outcomes

Not specifically examined but may be apart of internal business process results

between various scorecard results perspectives. TheBalanced Scorecard recognizes the driver relation-ships (Figure 6) between the four scorecard perspec-tives, enabling the organization to focus efforts onthose improvements that drive toward financialresults that are the ultimate measure of success in theeyes of stockholders and Wall Street.

Alignment of Baldrige, Lean,Six Sigma, and Balanced Scorecard Factors

The success of Six Sigma, Lean Thinking, and theBalanced Scorecard can be enhanced by a “Culture ofExcellence” that is characterized by the MalcolmBaldrige Criteria for Performance Excellence. Anintegrated Baldrige management system is one of thebest predictors of a successful Six Sigma initiative.

(See Figure 7) The alignment of Baldrige, Six Sigma,Lean Thinking, and Balanced Scorecards is demon-strated in Figure 8. Note the systematic method bywhich the Baldrige-based culture of excellence isestablished, waste is eliminated from processesthrough Lean Thinking, processes are moved towardperfection using Six Sigma, and progress is measuredusing a Balanced Scorecard to assess results. TheBaldrige criteria require waste reduction, processimprovement, and results that are aligned with busi-ness strategies and goals. Six Sigma, Lean Thinking,and Balanced Scorecard tools demonstrate how someorganizations have chosen to carry out these require-ments. The goal of this effectively aligned process isto drive beyond incremental improvement to break-through improvement—and breakthrough improve-ment is where significant competitive advantage isgained.

7Alignment with Six Sigma, Lean Thinking, and Balanced Scorecard

7

Learningand Growth

InternalBusiness

ProcessesCustomer Financial

Figure 6 Balanced Scorecard driver relationships.

Insights to Performance Excellence 20068

ManagementChallenges

Six Sigma Solution Baldrige Criteria Values and Requirements

Lack of linkageand alignmentthroughout theorganization

Linkage and align-ment of Six Sigmainitiative to the busi-ness’s “bottom line”

Baldrige Core Value: Focus on Results and Creating ValueBaldrige Alignment: Categories 1–6 These “Approach and Deployment” categoriesmust align with Category 7, Results. Approach and Deployment processes that don’tdrive toward improved business results contribute very little value to the organization.Baldrige Category 7, the Baldrige “Results” categories are a balanced set of measures,including Customer-Focused, Product and Service, Financial and Market, HumanResource, and Organizational Effectiveness, and Social Responsibility and Governanceresults.

Senior leader-ship delegationof leadership ofTQM initiativeto Quality orother department

Senior leadershipresponsibility forsuccess of the SixSigma initiative

Baldrige Core Value: Visionary LeadershipBaldrige Alignment: Item 1.1a(3) requires leaders to create an environment for empow-erment, innovation, organizational agility, and organizational and employee learning.Item 1.2a(1) requires leaders to translate organizational review findings into priorities forimprovement and opportunities for innovation

An unclear con-cept, direction orfocus

A leadership-driven,consistent, simple message

Baldrige Alignment: Item 1.1a(1) requires top leaders to set and deploy organizationalvalues, directions, and expectations.

An unclear goal Strong focus onambitious, nonam-biguous goals

Baldrige Core Value: Focus on Results and Creating ValueBaldrige Alignment: Item 2.1b requires the identification of key strategic objectives andtimetables for accomplishing them. These objectives should address the key challengesfaced by the organization. Items 6.1 and 6.2 require the improvement of value creationprocesses and support processes, including the focus on customer/market requirementsand the use of key performance measures/indicators to control and improve performance.

One initiativedeployed at theexpense of oth-ers “All eggs inone improve-ment basket”

A set of “tools” toaddress problemssystematically.Integrates well withother programs suchas Baldrige and Lean

Baldrige Concept: Baldrige is nonprescriptive. It insists that an organization developimprovement methodologies based on its particular business requirements and currentcircumstances.

Different organi-zational “silos”with differentimprovementinitiatives

Cross-functionalprocess focus—integration across the organization

Baldrige Core Value: Systems PerspectiveBaldrige Concept: The Baldrige Criteria focus on the integrated business system,aligned with strategic objectives and related action plans, not functional “silos,” in a waythat demands alignment throughout the organization and ensures links with demonstratedbusiness results.

Incremental versus breakthroughchange

Incremental andbreakthrough change

Baldrige Concept: Baldrige-aligned companies continuously compare their results tobest practices, both inside and outside an organization’s industry. This helps them under-stand world-class performance to drive to incremental and breakthrough processimprovement.

Training as anend in itself

Systematic trainingaligned with busi-ness-criticalprocesses

Baldrige Core Values: Organizational and Personal Learning; Valuing Employees andPartnersBaldrige Alignment: Item 5.2 focuses on using education and training to help achieveaction plans and strategic objectives, helping to ensure that the organization aligns itseducation and delivery methods to support key business requirements.

Quality as aproduct orservice charac-teristic only

Improvement of allbusiness processes

Baldrige Core Values: Customer-Driven Excellence, Organizational and PersonalLearning and Systems PerspectiveBaldrige Alignment: Baldrige Category 6 Process Management (6.1 Value CreationProcesses and 6.2 Support Processes and Operational Planning). The Baldrige Criteriago beyond reducing defects and errors, meeting specifications, and reducing complaints.They focus on continuous improvement of all processes throughout the entire organiza-tion and ensuring that all parts contribute value to customers.

Figure 7 Alignment of Baldrige, Lean, Six Sigma, and Balanced Scorecard.

Effective alignment of the organization through useof the Baldrige Criteria for Performance Excellencecan help jump-start Six Sigma initiatives by formal-izing leadership commitment, ensuring appropriateresource availability based on the importance of aproject to the organization, and providing an aligned

management system that focuses the organization’sefforts on the right improvement projects. Baldrige isa management system that focuses and aligns perfor-mance excellence activities. Six Sigma is a tool thatfocuses performance improvement activities.

Appendix E: Alignment with Six Sigma, Lean Thinking, and Balanced Scorecard9

1 Leadership6 Process

Management

7 Results

5 HumanResources

Baldrige/Lean Thinking/Six Sigma Alignment

Baldrige sets an overall organizational context of excellence and integrates and aligns management and improvement activities

Establish aCulture ofExcellence

Lean Thinking: Broad and

Shallow

Six Sigma: Narrow and

Deep

Not just incremental,

but breakthrough improvement

Balanced Scorecards measure the progress of the organization in accomplishing its goals and objectives (as does Baldrige Category 7)

Better Business Results

Six Sigma is used to perfect processes from which waste has been eliminated(also required by Baldrige Category 6 and Item 5.1)

2 StrategicPlanning

3 CustomerFocus

Workplace Safety, Order, Cleanliness

Value Stream Management

JIT Production EmpoweredTeams

VisualManagement

Lean Thinking is used to eliminate waste from processes(also required by Baldrige Category 6)

Systematic Process

Improvement

Data-Driven Decisions

Effective Teamwork

4 Measurement, Analysis, and Knowledge Management

Figure 8 Baldrige, Lean Thinking, Six Sigma.