Winning Is Everything
Contests are good for your ego and they're not bad for business, either
EVERYTHING HAD TO BE PERFECT. Downstairs at Texas Nameplate Co. in South Dallas, a panel of high-powered contest examiners for the Malcolm Baldrige National Quality Award was assembled for a tour of the $2 million company, which makes metal identification tags for electronics and oil-field equipment. Upstairs, Dale Crownover's people were scrambling around, attending to the last details. This was Crownover's third run for the award that some have called the Nobel prize of business, and the chief executive officer had spent months preparing his staff of 70 workers and his family-owned, 60-year-old factory.
The plan was to have the Baldrige judges enter the upstairs conference room with the smell of coffee brewing so they would feel welcome before getting down to business. But a maintenance worker had plugged two coffeemakers into the same outlet; when they were switched on as the judges entered the building, a fuse blew. To Crownover's horror, the arbiters of quality had to feel their way up the stairs in the dark. "It struck me," he remembers, "that God was asking: 'Do you realize you are dealing with the big boys now?'"
Apparently, the contest judges aren't fussy about fuses. On Feb. 4, Texas Nameplate became the smallest company ever to win the Commerce Dept.'s Baldrige Award. The official 1998 prize was 22 pounds of Steuben crystal, a trophy worth $12,000, presented by President Clinton, and an "attaboy" from Secretary of Commerce William M. Daley. But the real and lasting reward from Crownover's six-year quest, in which he entered more than a half-dozen contests, was the insight gained from top-notch CEOs and consultants who served as judges. Their advice helped save the business founded in 1946 by his father from a brush with bankruptcy. And it cost next to nothing.
IT'S NOT HARD to find contests; entrepreneurial awards are all the rage nowadays. Across the country, on almost any night of the year, some group or other can be found saluting the likes of the Greater Richmond (Va.) Small Business Person of the Year, cheering the stunned recipient of the KPMG Peat Marwick Bridges to Success Award, or fawning over the bedazzled Iowa Welfare to WoRk Small Business Entrepreneur of the Year.
The Ernst & Young Entrepreneur of the Year Award, one of the flashiest and most ambitious business beauty contests, began in 1986 with 600 entries. By last year, it was drawing more than 3,800 entries, up 58% in just one year. They came from 12 categories and 47 regions in North America, plus contests in 19 countries. The Small Business Administration's competition attracted 2,500 applicants nationwide, in such diverse categories as exports, regulatory innovations, and young entrepreneurs. PricewaterhouseCoopers is planning its own contests. Beyond that, entrepreneurs are being feted by a vast array of big companies, government agencies, business schools, magazines, newspapers, local chambers of commerce, and trade groups ranging from the Better Business Bureau to the National Association of Women Business Owners.
FOR PURE PRESTIGE, however, it's hard to beat the federally sponsored Baldrige. It's also very hard to win. More than 250,000 copies of the contest's criteria were sent out last year by the Commerce Dept.'s National Institute of Standards & Technology, but merely reading the 53 pages of requirements was enough to scare off all but 36 companies. Only 16 entered in the small-business category, which is limited to companies that employ fewer than 500 workers. Instead, many contestants opted for one of the more than 40 "Baby Baldrige" regional contests.
Baldrige examiners are legendary for their intense scrutiny and high standards. In some years, nobody wins. Applicants are graded on leadership, strategic planning, customer and market focus, information and analysis, human resources, process management, and, of course, actual business results. Each applicant that passes the preliminary examination -- only three small businesses did last year -- merits a "site visit" and undergoes 300 to 1,000 hours of evaluation. The examiners then provide each contestant with detailed feedback on the company's strengths and weak spots.
It's no cakewalk, and a whole industry of consulting firms has sprung up to coach contestants through the process. What Stanley Kaplan does for college testing, these businesses do for Baldrige applications, charging $25,000 to $250,000 for their services. "We know as well as anyone what it takes to succeed in preparing a Baldrige Award application form," says the Web site for Total Quality, a consulting firm in Bellevue, Wash., run by a former Baldrige examiner who offers application software and simulated site visits.
Some consultants even employ current Baldrige examiners, a potential conflict of interest that doesn't trouble the Commerce Dept. so long as judges don't judge their own clients.
But for sheer pageantry, nothing compares to Ernst & Young's Entrepreneur of the Year contest. The awards are typically given out at a swanky location with all the trappings of an Academy Awards ceremony, including high-tech special effects and an occasional weepy or whooping winner who might make Roberto Benigni's chair-climbing at the Oscars seem almost normal.
And that's just the regional awards. Ernst & Young hosts a national convention each year with 2,000 participants at a Palm Springs (Calif.) resort, where an overall winner is picked amid fog machines and laser-light shows -- with the entire affair broadcast live on the Internet. Victors take home a trophy that bespeaks its accounting sponsor: a crystal-encased bar chart (trending upwards, of course).
And the winner is...well, everyone involved, say participants and sponsors. Benefits include publicity, prestige, and a chance to make great contacts (box).
The big plus, contestants say, is that outside scrutiny from top-flight judges spurs them to improve their business practices. In particular, the Baldrige contest produces an exhaustive critique that's worth far more than the $1,500 entry fee. "That's the payoff," says Joel Marvil, CEO of Ames Rubber Corp. in Hamburg, N.J., which won the 1993 small-business Baldrige prize. He says that the advice might have cost $70,000 on the open market. "It's the best deal in the world," Marvil says.
Just don't let the quest for glory go to your head. "Winning the Baldrige can become an all-consuming thing that can have the same negative impact on a business that being on the cover of Sports Illustrated can have on an athlete or team," says Jeff Rich, a Texas entrepreneur and an officer of the Lone Star chapter of the Young Presidents' Organization. Rich says he doesn't enter contests because they're a waste of time and distraction. "At the end of the day, the only true measure of quality is the price your customers are willing to pay for your product or service," says Rich, who warns darkly about "the Baldrige curse," in which recipients have bellyflopped in the months following their victory. Also, in other national contests, taking a trophy has sometimes been a prelude to major missteps.
THAT'S EXACTLY WHAT Crownover, then 40, was worrying about six years ago. Texas Nameplate had lost one of its biggest customers because he had balked at going through an expensive and difficult supplier-certification program. The crisis threatened the existence of his $2 million company as well as the livelihood of Crownover's young family and the jobs of 70 employees -- many of whom he had known since childhood.
He tried adopting sophisticated management systems designed to improve quality, but Crownover, a college dropout, felt he was in over his head. He lacked the expertise, and he simply didn't have the cash to bring in pricey consultants.
Then he discovered he could get consulting on the cheap by entering awards programs, and he applied for whatever he could qualify for. Texas Nameplate didn't always take home a trophy, but every step of the way, its employees learned something valuable from the clipboard-clutching judges, most of whom were previous winners of their respective competitions.
"Professional quality geeks -- that's what I call them," says Crownover. "Even the questions the judges asked helped make us better. For example, the Arthur Andersen people wanted to know what percentage of our top customers I had visited in the previous 12 months. We immediately implemented a program to visit the people who buy and use our products and find out what we could be doing better or differently."
The strategy paid off. Between 1994 and 1998, Texas Nameplate's gross margins rose from 50.5% to 59%. The company's net margins doubled, and market share grew not just regionally but nationally as well.
In the early stages, Crownover's company won the regional level of the Arthur Andersen Best Practices competition, made the finals of the Ernst & Young Entrepreneur of the Year contest, and won the Texas Chamber of Commerce Quality Award. But like a beauty queen batting her eyelashes in Atlantic City, he wanted to go after bigger prizes.
Crownover had entered the national Baldrige in 1996 without much success. But in 1997, the company earned a site visit, which the CEO said was "worse than an IRS audit. We just weren't very well-prepared, and I was a nervous wreck. We tried hard not to come across like the Clampetts in The Beverly Hillbillies."
Both sides learned valuable lessons. Based on advice from the examiners, Texas Nameplate created a new strategic plan. And at a barbecue dinner hosted by Crownover, a certain Baldrige examiner learned never again to mistake a jalapeno pepper for a pickle.
By 1998, Texas Nameplate was primed. After the power was restored from the coffee-induced blackout, the judges grilled Crownover and his staff. The examiners often zero in on line workers and middle managers because they place a high value on an empowered and well-informed workforce.
To make sure his employees -- many of whom do not speak fluent English -- had all the answers, Crownover equipped them with notebook binders crammed with supporting data. More than 300 of the binders were strategically placed throughout the plant, within easy reach of employees.
"The lead examiner was in my office asking me questions for more than three hours the first day," recalls Bob Mantle, the company's sales manager. "And after every answer, I would hand her a binder with the figures to back me up. After I had given her six of them, she said: 'Please, no more.' But I could tell she was impressed by our data, because she jokingly asked if I would come and organize her office, too."
The examiners were indeed impressed. In their report, they praised Texas Nameplate for its strong customer focus, its growing market share, and its commitment to employees, their safety, and the community. At the awards ceremony, President Clinton singled out Crownover and his company in his remarks, and after the Texan accepted his prize, he received one of the Chief Executive's celebrated hugs. "Then he went down and shook hands with our employees and knelt down and talked to my 6-year-old. It was kind of electrifying," said Crownover.
So what does he do for an encore? The victory has made Crownover a hot property as a consultant to other aspiring Baldrige contestants. He has self-published a book about his Baldrige quest, titled Take it to the Next Level, that has sold about 1,000 copies. He has already served as a judge for Arthur Andersen and the Texas Chamber of Commerce competitions and has aspirations of becoming a Baldrige examiner himself. Before long, Crownover himself will be one of those professional quality geeks.
By Wes Smith
This article was originally published in the Apr. 26, 1999 print edition of Business Week's Frontier. To subscribe, please see our subscription policy.
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