Winning the Baldrige Award.

Embarking on the "Quality Journey" means changing corporate culture, empowering employees, and listening to customers. And it might well lead to a more impressive bottom line.

When President Clinton presented Eastman Chemical Co. with the 1993 Malcolm Baldrige National Quality Award in the manufacturing category, it was a victory for a team of nearly 18,000 employees.

Though winning the award was an important step in our "Quality Journey," we don't regard it as the final triumph. Eastman did not apply the principles of Total Quality Management to win the National Quality Award. We did it to win customers. And we've learned that a benefit of applying for the Baldrige Award is enhanced teamwork throughout the company.

Nearly everyone talks teamwork these days, but fewer organizations practice it. Without teamwork, however, employees at our widely scattered geographic plants could not have worked together to make Eastman the first major chemical company to capture the Baldrige Award. Hundreds of interlocking teams form the backbone of Eastman operations. Thus, everyone works toward the same outcome: creating superior value for our customers, employees, shareholders, and suppliers. Team measures are linked to corporate goals. And summary charts and graphs highlighting progress are posted in prominent locations throughout the company.

INTERLOCKING-TEAM CONCEPT

Team membership includes the chairman and CEO. When we were introducing TQM to the company, senior management teams attended both normal business-management meetings and regular "quality" meetings. As we matured in quality management, those duplicate sessions merged. Today, our weekly management meetings include reviews of the business as a part of the quality-management process.

Eastman's interlocking-team structure resembles a series of interconnected pyramids. The base of the higher pyramid overlaps the peak of the lower. Most employees are members of at least one team. Supervisors are members of at least two--they lead the teams formed by their direct reports, and they are members of the teams headed by their supervisors.

A two-way information system results from this interlocking structure. The interlocking-team process enables employees to develop goals and measures that correlate directly to the company's goals and measures. These teams, which typically meet weekly, give employees the opportunity for involvement and ownership in managing their work areas. They also promote information-sharing and feedback throughout the company. We continually reinforce goals and messages through print and electronic media. We also use face-to-face communication--from small group meetings to company wide communications through satellite broadcasts.

QUALITY EVOLUTION AT EASTMAN

The interlocking-team concept is not an addition to our existing organizational structure. It represents one element of a completely new organization. Let's look at how Eastman became a company committed to TQM.

Adoption of quality principles has been neither quick nor easy. It required a willingness to break from tradition and from accepted business practices. We took our first steps toward the Baldrige Award nearly two decades ago. In the years since, Eastman has become more attuned to its customer needs. We weren't always open to change.

Our wake-up call was the result of input from a valued customer that told us its company was not satisfied with a major Eastman product--cellulose acetate fiber--a product we had invented. Therefore, it was considering dropping Eastman and purchasing additional products from one of our competitors.

Though it was difficult to accept, we had lost touch with our customers. Our standards--not our customers'--defined quality. We learned a valuable lesson: Change and survival are inextricably linked.

Eastman has changed--not by a little fine-tuning, but by a massive overhaul of the corporate engine. The company reinvented the way it operates and deals with customers. When we say we manage for quality, that means we start and end with the Quality Management Process. QMP focuses on both internal and external customers. Every company team uses QMP. Team members are trained to understand and use quality methods and systems, including control charts and process control. Employees participate in a continuous cycle in which they plan quality improvement, do improvement, check progress and results, and act to drive and maintain gains.

The concept of involvement is a departure from the way Eastman and nearly every other company managed in the 1970s. When our customer threatened to go to another supplier for a product' so closely identified with our company, it indicated that our traditional system was not producing quality. It was producing compliance. We needed a sense of ownership. Owners want involvement in growing the company. Today, we recognize that our success depends upon all employees' participation in managing for quality.

As we learned the value and the power of the team concept, we scuttled our Suggestion System. This individual-reward system inhibited teamwork and full participation by all. We eliminated time clocks, and we don't miss them. Clocking in daily reinforced that trust was not part of the system. Our traditional performance-appraisal process was scrapped in favor of a development and coaching process. Improvement results from changing the system, not from end-of-the-line appraisals.

As in other traditional systems, Eastman supervisors originally directed, assigned, appraised, and managed. We replaced them with "coaches" who empower, teach, coach, and enable. Operators who had narrow jobs, a limited focus, few advancement opportunities, and restricted decision making now are empowered technicians with multiple skills, a business focus, and a career path. In some areas, self-managed, or self-directed, teams operate without supervisors to manage their units. Our manufacturing-site managers function as a self-directed team, as do our administrative vice presidents and our directors of research, development, and technical service. These changes forced decision making down in the organization and broadened our perspective. We now emphasize managing for the good of the entire organization rather than for the good of individual sites or functions.

A company can only unleash the intellectual capital of its people through empowerment. It stimulates innovation. It shortens channels of communication. It motivates people, because they have ownership in the business. We're learning that if you give people the opportunity to improve the business in a way that helps them increase their own knowledge, their self-esteem and pride ignite a willingness to change. We also have introduced an employee stock ownership plan that makes every employee an owner of the company. Ownership changes behavior, and work takes on a new meaning.

Recently, for example, a sales representative in one state was working with a customer in another to obtain product samples from our manufacturing site in a third state. The customer had a short deadline for processing the product sample before ordering. Knowing that working through normal channels might cause the customer to miss the deadline, the sales representative flew to the manufacturing site, rented a truck, had the product samples loaded onto the truck, and personally drove the truck to the customer's plant. The result: a delighted customer and business for Eastman.

CUSTOMER FOCUS DRIVES QUALITY

An important step in Eastman's journey toward winning the Baldrige Award and emerging as a new company occurred in 1991 with the realignment of our businesses. Our former structure was based on product lines. Our new structure is market-oriented. In the old mind-set, we manufactured products and then looked for places to sell them. Today, we seek to understand the markets we serve, recognize customer needs, and exceed customer expectations.

This is the driving force behind our MEPS process. MEPS means Making Eastman the Preferred Supplier. Employee teams identify, plan, and implement improvement projects that aim to increase and enhance customer service and satisfaction. About 250 MEPS projects are in progress. One MEPS team, for example, was formed to eliminate discrepancies in customer accounts. These may occur when disagreements arise between Eastman and its customers regarding price, quantity, or returned material. A cross-functional team attacked the problem on two fronts. It wanted to eliminate up-front causes of customer-account discrepancies and to reduce the time required to resolve them. Customer-account advocates, with authority to act in certain situations, now interface with customers to resolve problems. We also added an 800 number to invoices to encourage customers to call us before paying their bills.

Eastman's plastics customers benefit from a customer-satisfaction policy that is unique in the industry. Customers that purchase non-custom plastics know our no-fault return policy allows them to return any shipment--full credit, freight collect--if they believe it does not measure up to their expectations. This new focus changed the way we interact with our customers. We recognize that customers have both the right and the responsibility to define quality. Employees at all levels of the organization now are frequently involved in meetings with customers. These meetings often include operators and sales and service representatives. Customers are encouraged to be open, honest, and specific in their critiques of Eastman products and service when filling out our customer surveys.

Since 1986, Eastman has surveyed customers every 12 to 24 months, depending on the market. Our sales representatives hand-deliver survey forms (printed in nine different languages). More than 18,000 survey responses--representing 80 percent of our dollar sales--comprise our customer-satisfaction data base. Over 70 percent of our customers consistently rank Eastman as their No. 1 supplier.

As a result of MEPS and other TQM processes, we expect to maintain and even exceed that level of customer satisfaction.

IT TAKES LEADERSHIP

As any Baldrige Award winner will tell you, implementation of TQM is not easy or automatic. Because it results in a changed organization, there is often significant employee resistance. When we were introducing TQM, there were many skeptics who were not convinced we were on the right path. A few are still not convinced, but there will always be some who are afraid of change.

It was not a simple task to channel the resources of nearly 18,000 men and women toward remaking Eastman into a company that manages for quality. Leadership was an essential ingredient. Our first major quality initiatives began in the 1970s. Our customer-satisfaction work began in earnest in the early '80s. Senior management provided support for TQM and encouraged those willing to change, willing to be empowered, willing to become owners of their processes and their company. But it was not until 1986, when the senior management team adopted the quality principles, that we really accelerated our progress. That's when we began to use TQM every day.

It is no coincidence that leadership is the first category in the Baldrige criteria. Leadership unites the social, process, and structural changes that are necessary to move to TQM.

A NEW ORGANIZATION

Once Eastman decided to become a market-focused company, we knew we had to reshape the entire company. Our new organization chart is more than a visual departure from the lines and boxes of our previous organization. It is now known as our "pizza chart." The circular configuration is intended to minimize top-down thinking and practices. No organization dominates another.

Each circle on the chart represents a multifunctional team. In addition to the lines connecting the circles, there is a bold circular line around the entire organization. That illustrates the expectation of on-going communication and networking among all elements of the company.

I consider the white space around the circles most important. That's the area in which interaction among teams takes place. That's where ideas are born--ideas that spawn innovation, that meet a customer's immediate need, and that create products in harmony with marketplace demands. That's where value is created...and it's done without "bosses" telling people to do it.

QUALITY: THE NEVER-ENDING JOURNEY

When Eastman began its Quality Journey, we didn't know where it would take us. All that was certain was that we were on the road to change. Our focus is now much sharper. We're not the same company now that we were then. We're not the same company now that we'll be at the turn of the century. But there is one constant element, and that is our commitment to managing for quality. We share that commitment not only with the 18 other companies that have won the Malcolm Baldrige National Quality Award, but with the thousands of other organizations that use the Baldrige criteria to assess and manage their businesses.

And we know we're a stronger company for having started the journey.

Earnest W. Deavenport Jr. is chairman and chief executive of Eastman Chemical Co., a $3.9 billion Kingsport, TN-based spin-off of Eastman Kodak Co. that produces chemicals, fibers, and plastics. He is chairman of the Chemical Manufacturers Association and past chairman of the American Plastics Council.