by Robert Green

On March 7, 2002, President George W. Bush and Commerce Secretary Don Evans presented five organizations with Malcolm Baldrige National Quality Awards in recognition of their performance excellence and quality achievements. Among the winners was Clarke American Checks Inc., which won in the manufacturing category.

Founded in 1874, Clarke American supplies personalized checks, checking-account and bill-paying accessories, financial forms, and a growing portfolio of services to more than 4,000 U.S. financial institutions. With its headquarters in San Antonio, the company employs about 3,400 people at 25 sites in 15 states.

In addition to filling more than 50 million personalized check and deposit orders every year, Clarke American provides 24-hour service and handles more than 11 million calls annually.

Clarke American's industry has undergone massive consolidation, leaving three major competitors with a 95-percent share of the $1.8 billion U.S. market for check-printing services supplied to financial institutions. However, since 1996, Clarke American's market share has increased 50 percent. Revenues were greater than $460 million in 2001.

What follows is an interview with Karen Hollingsworth, the company's vice president of First in Service performance excellence. This is the second of five interviews, conducted with a representative from each 2001 Baldrige Award winner, appearing in consecutive issues of Quality Digest.

QD: Tell us a little about Clarke American.

Hollingsworth: Clarke American is predominantly thought of as a check-manufacturing company. Our core business is producing checks and check products for financial institutions. We sell these products directly to the customer. We have a relationship that's based upon our partners--the financial institutions--which are banks, credit unions and securities firms that sell our checks to their end-user customers.

In addition to checks, we provide business forms, deposit tickets and a number of other types of forms for financial institutions. We also provide some accessory products through our servicing arena. We have about 17 plant sites across the nation.

And we have seven call centers, which act on behalf of our financial institution partners to accept calls from their customers (our mutual customers) regarding reorder, address changes, any of the things related to the check. We also offer other products for sale: daytimers, portfolios, check-filing systems and so on.

QD: How long has Clarke American been in business?

Hollingsworth: One hundred and twenty eight years. We actually have an original partner from 128 years ago: Frost Bank, which is also headquartered in San Antonio.

QD: When was the Baldrige criteria first introduced to the company and what was the attraction?

Hollingsworth: The company applied for the Baldrige Award for the first time in 1993. It was introduced because in the 1993-1994 time frame, the industry was going through a tremendous financial pricing crisis. At that point, there were probably in excess of 60 check printers in the United States. During this pricing crisis, there was a tremendous amount of acquisition, divestiture and collapse. Today there are essentially four players in the market.

Having spent his life in manufacturing, our CEO, Charles Corbell, knew that in order for Clarke American to survive--as this market collapsed and all these printers collapsed--we'd have to distinguish ourselves as something different. And it was he who chose the Baldrige process.

QD: What was the outcome of that initial application?

Hollingsworth: When the company first applied for the Baldrige Award, we didn't get a site visit. In hindsight, that's the best thing that happened because the examiners provided a very good feedback report, which of course is the value of participating in the Baldrige process.

I believe that not getting the site visit, yet having the feedback report, really helped the company develop a respect for the process and improvement. We reapplied in 1994. That was the beginning of our serious quality journey. We've been on a quality journey since about 1986 in the customer-focused arena, understanding that the customer is first.

QD: What does the "First in Service" term your company uses refer to?

Hollingsworth: We adopted that concept in 1986 to help us focus on the customer through the use of listening posts and surveys, and performing quality function deployment studies. The very first examiner feedback report was the catalyst. It suggested that we were too internally focused. We weren't looking outside our own company and outside our own industry. We responded by benchmarking outside the industry in a big way. I think that's what has led to the success today.

QD: For Clarke American, what was the most difficult element of getting to that highest of Baldrige levels?

Hollingsworth: Particularly when we began to focus on the customer early on, it really required a shift in the way we thought about who our customers are.

Initially, the industry as a whole focused on banks and financial institutions as the customers. The Baldrige process was the reason we renamed that group as partners, because it was actually the end users of the product that could tell you whether they were satisfied with the products that they received. They could tell you about the total experience of ordering and receiving and so on. So, when you're wrongly focused on the wrong customer set, you make wrong decisions. I think making that change to our mode of thinking was the greatest challenge.

QD: Has your company tracked the expenses associated with not just the application but the implementation and the refining of the criteria?

Hollingsworth: We track everything here. We're an incredibly measurement-focused organization. Yes, we do track expenses related to both applying, celebrating, site visiting--all of that sort of thing. But the aspect of managing the business using Baldrige, the implementation, is actually built into the budget of every line manager. And we don't pull that out separately simply because the way we view it here is that "First in Service" is the responsibility of every associate of Clarke American. And every leader of every organization certainly needs to be making the right choices and decisions of using our First in Service quality tools to embed this in the way they do daily operations.

QD: Has the company experimented with any other performance improvement methodologies, such as ISO 9000, Six Sigma or quality circles?

Hollingsworth: We don't utilize ISO 9000; it's not something that's of value to our particular customer base and partner base. Having come out of a manufacturing background, I'm very familiar with ISO 9000. If we see that our market ever develops a penchant for that, I feel like we could receive registration very readily because we're incredibly well-documented from a process standpoint, and we adhere to all the tenets of ISO 9000. We just haven't sought certification.

Secondarily, I would say that our First in Service culture is uniquely designed by Clarke American, but it encompasses the concepts and philosophies of all of the quality gurus that have come before. We really value the leadership focus and all of the team methodology that Joseph M. Juran and W. Edwards Deming would have had in place. And we understand the value of defect reduction that Philip Crosby would have focused on. We even have something in our First in Service methodology that very much equates to the Six Sigma Black Belt. It's a key company-management position. And I've actually been through deployment of Six Sigma with two other companies; I understand Six Sigma very well and can look at our culture and say that all of the pieces of it are here, but we just don't feel a compelling need to relabel our processes with some other methodology.

QD: Compare the levels of difficulty in the two different tasks of getting the company to the Baldrige recipient level and then maintaining that level of excellence once the award has been achieved.

Hollingsworth: We've not reached a plateau. This is not something that was an end goal. This is certainly a significant milestone on our journey, but our vision is to be a world-class company. We've defined "world class" as sort of the Good Housekeeping seal of the Baldrige process. That's been part of our vision. But I think maintaining it is even more challenging--you can't let up; you have to continue the process, and we're certainly prepared to do that and have said that all along; this is a milestone and not a finish line.

The reason that I think it's more challenging is that you certainly come under greater scrutiny from outside, and you have to be very careful not to dilute your interests and to continue to manage your business using the tools. I think there's a lot more activity that has to be managed effectively. Keep your focus on the business and continue to apply your First in Service tools and methodologies to it.

For more information about Clarke American, visit www.clarkeamerican.com. For information about current or past Baldrige Award winners, visit www.nist.gov/public_affairs/releases/g01-110.htm.

About the author

Robert Green is Quality Digest's managing editor. Letters to the editor regarding this column can be e-mailed to letters@qualitydigest.com.