Most of us have heard the anecdote that "a majority of Baldrige Award winners have gone bankrupt." I don’t know if that’s true, but I wouldn’t be surprised. Perhaps there’s a similar situation with the Shingo Prize. We’ve blogged several times about the problems with the Shingo Prize, and it’s propensity to be awarded to bankrupt companies like Delphi. As we’ve stated many times, the bottom line metric of lean is profit, and bankruptcy doesn’t quite achieve that.
Our friend Mark Graban at the Lean Blog apparently had some spare analytical time on his hands. He looked at past Shingo Prize winners from an investment standpoint, and concluded that the Prize isn’t exactly a positive indicator.
If you invested in the Prize winners since 2001 you would have a net return of… -75%. Ouch.
Ok, perhaps Delphi should be removed since the bankruptcy has killed their value and they also represent a majority of winners. But even with that rather arbitrary change, the net return of Shingo Prize winners is still -55%.
If you weight the private companies using the Russell Small Cap index as a proxy, the net return is still -59%.
What’s wrong with this picture? Sure there are other factors involved in a company’s performance and I’m sure some people will go to great lengths to rationalize the results, but this is definitely an interesting data point.
Lawrence Loucka says
Perhaps it’s a question of too little too late. Without striving for productivity improvements Delphi would have gone under earlier.
Norman Bodek says
The first year when the Shingo Prize was to be awarded, we looked at the potential prize winners and not one company could pass the minimum productivity improvement requirements. Well, when you have a prize you must have winners. I asked Dr. Shingo to help us. He said, “You run the prize like a beauty contest, and select the best one.” Also the prize is normally given to a plant not to the overall company. Delphi might have had some excellent plants worthy of winning the prize, but Delphi is a huge company, dominated by General Motors and with pressures from Wall Street, not generally supportive of Lean efforts.