"America's Most Admired Companies"

Anne Fisher

Fortune

March 6, 2006, pp. 65-76

Each year, Fortune magazine gives its rankings of America's most admired companies, based on ratings made by US and worldwide executives, directors, and securities analysts. This year's Top Twenty in America were:

1. General Electric
2. FedEx
3. Southwest Airlines
4. Procter & Gamble
5. Starbucks
6. Johnson & Johnson
7. Berkshire Hathaway
8. Dell Computer
9. Toyota Motor
10. Microsoft
11. Apple Computer
12. Wal-Mart Stores
13. United Parcel Service (tie)
13. Home Depot (tie)
15. PepsiCo (tie)
15. Costco Wholesale (tie)
17. American Express
18. Goldman Sachs
19. IBM
20. 3M

Ratings were also made for companies in the respondents' own industries on social responsibility, innovation, long-term investment value, use of corporate assets, people management, financial soundness, quality of products/services, and quality of management. The high scorers on these criteria were:

• Social Responsibility—United Parcel Service, International Paper, Exelon
• Innovation—Apple Computer, Google, UnitedHealth Group
• Long-term investment value—Exxon Mobil, UnitedHealth Group, Altria Group
• Use of corporate assets—Exxon Mobil, UnitedHealth Group, United Parcel Service
• People management—Procter & Gamble, General Electric, Google
• Financial soundness—Exxon Mobil, Microsoft, United Parcel Service
• Quality of Products/services— Nordstrom, United Parcel Service, Walt Disney
• Quality of management—UnitedHealth Group. General Electric, Procter & Gamble

The top ten admired companies around the world were:

1. General Electric
2. Toyota Motor
3. Procter & Gamble
4. FedEx
5. Johnson & Johnson
6. Microsoft
7. Dell Computer
8. Berkshire Hathaway
9. Apple Computer
10. Wal-Mart Stores

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"Using Strategic Performance Measurements to Accelerate Lean Performance"

Bruce Baggley

Cost Management

January/February 2006, pp. 36-44

The author of this article argues that traditional performance measures do not work in a lean setting because those measures were designed to support mass production. "Lean" performance measures should reflect the principles of lean thinking, drive improvement of value stream results, control adherence to standards in cells, and link cell and value stream strategies and goals to corporate strategies and goals.

The article provides a "Starter Set" of lean measures that can be tailored by individual companies:

• Cell Level measures that "enable the cell team to get done during a shift what has to be done during that shift". Cell Level measures include Day-by-the-Hour reports, Work-in-Process to Standard Work-in-Process, First Time Through Quality, and Operational Equipment Effectiveness.
• Value Stream measures that "calibrate how well the value stream is doing in proceeding towards the performance targets designed into the future state map…They serve as a means of calibrating the effectiveness of ongoing continuous improvement measures and of designing future improvement initiatives." Value Stream measures include Sales Per Person, On Time Delivery, Dock-to-Dock Time, First Time Through Quality, Average Cost Per Unit, and Accounts Receivable Days Outstanding.

The following work plan is suggested for a kaizen event to implement these new measures:

1. Pick a value stream and cell to pilot the measures
2. Decide whether the starter set will be used as is or tailored
3. Teach all people in the company about the new measurements and measurement philosophy
4. Design the measurements, measurement boards, data collection methods, and improvement methods
5. Place the measures and new methods in the value stream and cell
6. Run the value stream and cell for one month using the new methods, discontinuing all other performance measures for those areas
7. At the end of the month, review results of the test, modify measures, and implement

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"Manage Complaints to Enhance Loyalty"

John Goodman

Quality Progress

February 2006, pp. 28-34

Providing facts and data from over 20 years of research, the author of this article identifies five key aspects of effective complaint management:

• Soliciting and satisfying a complaint usually results in a 50% increase in loyalty vs. the unarticulated complaint
• Moving a complainant from dissatisfied to completely satisfied raises loyalty 30 to 50% and produces significant word of mouth-the source of 20 to 75% of all new customers
• Many problems leading to complaints can be prevented via proactive customer education and empowering frontline staff
• Any effective Voice of the Customer process can identify problem prevention opportunities that can reduce overall service expense by 10 to 15%
• Loyalty can be further enhanced by identifying inexpensive "delighters" (such as education on avoidance of problems, information on new services of interest, or just a friendly 90 second human interaction), which can be implemented during the complaint and general customer service process

Four best practices in complaint handling are also identified in the article:

• Aggressively solicit complaints via multiple channels
• Improve the effectiveness of your complaint-handling process to ensure almost all complaints are satisfied in a profitable manner when the value of the customer is taken into account
• Prevent problems and complaints by proactively telling customers how to avoid unpleasant surprises and problems
• Identify the inexpensive actions that delight customers. Evaluate the relative cost and impact of each action to determine which should be systematically implemented

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"Rapid Knowledge Transfer: The Key to Success"

Michael English and William Baker

Quality Progress

February 2006, pp. 41-48

The authors of this article argue that companies should combine Knowledge Management and systematic improvement into a framework that consists of a knowledge-enabled culture and four phases: "A knowledge enabled culture is created when an organization employs a system of aligned human resource policies, tactics, processes and practices that ensure knowledge is created, captured, used and reused to achieve superior organizational results as a sustainable advantage."

The four phases are:

1. Search for and Import Best Practices—A framework for classifying processes to investigate includes:
   • Develop business and strategy
   • Design and develop products and services
   • Market and sell products and services
   • Deliver products and services
   • Manage customer service
   • Develop and manage human capital
   • Manage information technology and knowledge
   • Manage financial resources
   • Acquire, construct, and manage property
   • Manage environmental health and safety
   • Manage external relationships
   • Manage improvement and change
2. Learn, Understand and Share—Organizations need to encourage knowledge acquisition and provide a systematic way of digesting and sharing that knowledge;
3. Create Intellectual Capital—Intellectual capital is knowledge that can be converted into value and profits. It includes human capital (knowledge inside people's minds and abilities), intellectual assets (programs, inventions, processes, designs, methodologies, documents, databases, and drawings), and intellectual property (patents, copyrights, trade secrets, and trademarks);
4. Convert Intellectual Capital into Value and Profits—This phase involves reusing proven breakthroughs or best practices in new or different situations. Some examples are software reuse, database management systems, utility patent reuse, franchise business models, surveys, and engineering designs.

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"Training Top 100"

Training

March 2006, pp. 40-59

Since 2001, Training magazine has been issuing its yearly list of the top 100 internal training organizations in the United States. Brief descriptions are given of the training efforts in each company. This year's top 25 are:

1. Booz Allen Hamilton (consulting services)
2. IBM (technology)
3. Ernst & Young (consulting services)
4. The Ritz-Carlton Hotel Co. (hospitality)
5. Lockheed Martin Corp. (defense products)
6. Verizon Wireless (telecommunications)
7. Wyeth Pharmaceuticals (pharmaceuticals)
8. Pfizer, Inc. (pharmaceuticals)
9. KLA-Tencor Corp. (semiconductors)
10. General Mills (food manufacturing)
11. Ohio Savings/Am Trust Bank (financial services)
12. Deloitte & Touche USA (accounting services)
13. PricewaterhouseCoopers (accounting services)
14. BMO Financial Group (financial services)
15. Roche Diagnostics Corp. (medical services)
16. Intel Corp. (semiconductors)
17. Northwest Airlines Corp. (transportation)
18. Capital One Financial Corp. (financial services)
19. BB&T Corporation (financial services)
20. Special People in Northeast Inc. (nonprofit services for people with disabilities)
21. Paychex Inc. (payroll services)
22. Wachovia Corp. (financial services)
23. Microsoft Corp. (software)
24. The Reynolds and Reynolds Corp. (consulting services)
25. Wells Fargo & Co. (financial services)

Note: The March issue of Training magazine also has detailed stories on the Top 5 on this list, as well as a story on Best Practice companies for training in First-line Supervision, Remedial Skills, Technology, Communication Skills, Job Rotation, Diversity, Certification, Mentoring, and Customer Service.

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Further Thinking on Strategic Performance Measures

John McNeil, GP Deltapoint
 

Baggley exhorts us to use key performance measures instead of relying exclusively on traditional measuring systems. He even provides a starter set of measures and steps to use them. But one step is harder than the others… "Decide whether the starter set will be used as is or tailored". That's a little reminiscent of the business plan flowchart element labeled "miracle occurs here".

Here is a set of steps that have served us well for deciding on which measures best define a process and which to monitor for improvement. We sometimes call them PFRCNCXRP, but as you will see, your acronyms may vary.

Begin by mapping the process flow (PF). You may already have done this in a Value Stream Mapping exercise. Be sure in this case to list all the inputs and outputs from the process, taking more care than usual to take account of external factors. You may also benefit from a "Supplier, Input, Process, Output, Customer" or SIPOC chart.

Now determine which of the input factors in our process flow is acting as a root cause of poor performance (RC). This stage may involve some intensive data analysis and can almost certainly benefit from a discussion with the front line experts who work close to the process.

Our candidate root causes should next be segregated to focus on the critical few. Using a combination of analysis (for example multiple regression), and judgment, determine whether each factor is external and out of our control for now. Weather, government regulations and supplied part variations may all be examples. For those factors, we should strive to make our process as robust as possible to the variability or noise (N) we anticipate. The remaining factors can be segregated into those that are enough in control now (C) to satisfy our needs and those that are subject to experimentation (X). The X-factors are those that we will need to monitor intensively using Baggley's approach. This stage requires care and knowledge. Control charts and designed experiments are important tools in this stage.

Once we have selected the X-factors and are monitoring them, we will need to put improvements in place and lock them using standard work. Key tools for this are Routine Procedures (RP), but they will only produce standard work in a broad culture of training to standards, auditing activities, treating failures and measuring performance.

Worked repetitively and consistently, PFRCCNXRP can help us attain Baggley's goal of measures that reflect the principles of lean thinking, drive improvement of value stream results, control adherence to standards in cells, and link cell and value stream strategies and goals to corporate strategies and goals.

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