Oct 28, 2016 4 min read

MEADOW LANDS – It was a problem with a kinked tube frequently occurring on a production line, a critical component in a piece of medical equipment, that taught Bob Stearns how out of touch organizations can become.

Stearns, who was guest speaker Friday at Washington County Council on Economic Development’s annual luncheon at the DoubleTree hotel on Racetrack Road, was director of organizational development at Pittsburgh-based Medrad Inc. when he worked with employees to correct the production problem.

Finding the solution was the impetus toward his work on a new training program, helping the company realize a sales and profit growth and earn the Malcolm Baldrige Award in 2003.

“The manufacturers on the floor said the biggest issue they saw was that some of the connectors tubes they were producing would become kinked and would have to be thrown away. I asked them how often this happens and they told me about 400 times each month.”

Stearns, who said the issue taught him “to ask stupid questions,” said the answer to his next query was truly stupefying.

“When I asked them how long this had been going on,” he said, “they told me for about 10 years.”

Stearns, who today is CEO of Power Potential, a leadership and organizational development consulting and training company, said it was an employee who ultimately came up with a simple clamp design that eventually eliminated the kinking problem, helping Medrad save about $50 million by making process improvements as well as growing sales and profits by 15 percent a year.

The work earned Medrad the Baldrige Award, one of only 100 organizations to earn the honor in the 25 years of its existence.

The reason so few organizations hold the award, named for former Secretary of Commerce Malcolm Baldrige Jr. who championed government productivity and efficiency,is that it requires participants to focus on becoming a top performer in seven key areas: leadership; customer focus; measurement and analysis of key metrics; process management; business results; human resources; and strategic planning.

“Most companies are good at one or two of these,” Stearns said. “Baldrige companies are good at all of them.”

That’s why, he said, Baldrige companies outperform the stock market by a ratio of 4 to 1.

For Medrad, he said, sales and profitability have improved an average of 15 percent every year for the past 20 years, while productivity is up 86 percent over that time.

While some of that performance predates the kinked tube challenge, Stearns said it proves that even highly successful companies are not always performing up to their highest potential.

When he observes processes at the companies with which he consults, Stearns said he is often asked, “Why can’t we see the problems you’re seeing?”

His answer, he said, is because he’s looking at events with a different said of eyes that have been trained to look for “kinks” in the process.

“But you can train people to look for problems,” he said.

WCCED was formed some 30 years ago when the area was looking for ways to help people who had lost their jobs from the collapse of the region’s steel industry.

Today, according to Ray Vargo, a member of the council’s executive committee, the organization is the largest U.S. Small Business microloan lender in Pennsylvania. Last year, it received 68 small business loan applications for $2.75 million, closing on 30 of them for $1.32 million.

The largest economic development project for WCCED is the Starpointe business park near Burgettstown, where the council is developing about 1,100 acres.

WCCED Executive Director Dan Reitz said all but one of 10 lots in the park’s first phase have tenants.

Two buildings for HRP Holdings/Komal Foods are nearing completion at 30 Todd Drive, while plans have been received for a building for Keystone Containment, manufacturer of liners for retention ponds, in Phase 1-A.

Reitz said the park is receiving inquiries from several German companies because of the presence of Hörmann Flexon, a German manufacturer of industrial doors which began operations in the park several years ago.

Reitz said the council is also preparing to move about 1.8 million cubic yards of earth to create lots of between six and 39 acres for Phase 1-C.

“The Shell (ethane) cracker plant (in Beaver County) is only 19 miles from the park” in, Reitz said, adding that it is expected the massive project will take about three years to complete.

“We’d like to have (1-C) completed by the time Shell comes on line,” he said.