Conceptual Foundations of Strategic
Planning in the Malcolm Baldrige
Criteria for Performance Excellence
MATTHEW W. FORD, UNIVERSITY OF CINCINNATI
JAMES R. EVANS, UNIVERSITY OF CINCINNATI
Although the Malcolm Baldrige Criteria for
Performance Excellence (CPE) have played a signifi-
cant role in the practice of quality management,
researchers have been slow to embrace the CPE frame-
work. By viewing the CPE as an integrative model of
organizational effectiveness that encompasses a
number of cross-functional disciplines, one is led to
speculate that a large body of literature relevant to
the CPE framework exists. Indirectly, through their
functional research, scholars from a variety of disci-
plines have been investigating the theoretical issues
that embody the CPE. This article compares the strate-
gic planning category of the CPE against the scholarly
literature. The planning framework embedded in the
CPE aligns considerably with the conceptual literature
on strategic planning. These findings suggest some
validity for the CPE framework, which demonstrates
the translation of research into managerial practice
and might inspire further research.
Key words: action plans, long-range planning, strategy
deployment, strategy development
8 QMJ VOL. 7, NO. 1/ 2000, ASQ
2000, ASQ
The Malcolm Baldrige Criteria for Performance
Excellence (CPE) are designed to help organizations
enhance competitiveness through the delivery of ever-
improving value to customers and improvements of
overall organizational performance and capabilities.
The CPE serve as a basis for organizational self-assess-
ments, as well as the basis for the Malcolm Baldrige
National Quality Award. Numerous state and local
agencies (Bobrowski and Bantham 1994) and other
countries (Powell 1995) have adopted similar award
frameworks. As such, the CPE have attracted consider-
able industry interest. The National Institute of
Standards and Technology (NIST), which manages the
National Quality Program (http://www.quality.nist.gov),
reports that more than 1.5 million copies of the criteria
have been disseminated since the awards inception in
1987. Many firms use the criteria as a management
guide, and considerable evidence exists as to the
benefits of doing so (General Accounting Office 1991;
Hendricks and Singhal 1997; NIST 1997a; Wisner and
Eakins 1994). The CPE are evaluated and improved
annually, primarily drawing upon the collective wisdom
of examiners, award winners, and other practitioners.
Despite a high level of practitioner attention, theo-
retical and empirical research that focuses on the CPE
has been minimal. Most citations have appeared in the
operations-related literatures. In addition to the perfor-
mance studies cited, Garvin (1991) examined the
content, purpose, and content of early versions of the
criteria based on detailed discussions with award examiners.
Ahire, Landeros, and Golhar (1995) used a version of
the Baldrige Award framework to classify extant
research in quality management. Evans and Ford (1997)
examined the relationships between the core values
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
and the managerial processes that are embedded in the
criteria, and Evans (1997) proposed a causal modeling
approach to describe key linkages in the criteria.
Baldrige Award-specific research in other scholarly
disciplines has been virtually nonexistent. This is some-
what surprising, since the content of the CPE touches a
variety of traditional academic disciplines, such as
marketing, information systems, human resources,
leadership, and strategic management, in addition to
operations management.
This lack of scholarly coverage casts a shadow on the
theoretical validity of the CPE. In this article, however,
it is argued that by viewing the CPE as an integrative
model of organizational effectiveness that encompasses
a number of cross-functional disciplines, a large body
of research related to the CPE framework actually does
exist. Indirectly, through their functional research,
scholars from a variety of disciplines have been investi-
gating the theoretical issues that embody the CPE.
In this article, the relationship between the CPE and
the scholarly literature is demonstrated by conducting
an in-depth examination of the CPEs strategic planning
category. This category was chosen because of the
elements centrality to the CPE framework, its significance
in achieving competitive success, and because of the
rich scholarly treatment of the strategic planning concept.
The main focus is on the conceptual literature related
to strategic planning, since the majority of scholarly
Figure 1 Baldrige Award criteria framework (adapted from NIST 1998;43).
writing on strategic planning to this point has been
based on propositions that have yet to be effectively tested.
A conceptual foundation provides the raw material for
more substantive theory development.
The authors demonstrate that the strategic planning
framework represented by the CPE aligns considerably
with the conceptual literature. Literature comparisons
using other CPE categories (leadership, customer
focus, and so on) are likely to yield similar findings.
Therefore, it is suggested that, despite the lack of direct
scholarly attention, the framework embodied by the
CPE is grounded in research-based principles.
THE CRITERIA AND
STRATEGIC PLANNING
The Malcolm Baldrige Criteria for Performance Excellence
(CPE) consist of a hierarchical set of categories, items,
and areas to address. The seven categories associated
with the 1999 criteria are leadership, strategic planning,
customer and market focus, information and analysis,
human resource focus, process management, and busi-
ness results. These categories are intended to embody
results-oriented requirements that characterize an
effective performance management system (NIST 1999,
5). The conceptual relationships between the various
categories that comprise the CPE are portrayed in
Figure 1.
2000, ASQ
M. W. FORD AND J. R. EVANS/ 2000, ASQ 9
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
Several items compose each category, defining
specific elements of an effective management system.
Each item, in turn, consists of one or more areas to
address, which detail specific requirements about
approaches used to ensure and improve competitive
performance, about the deployment of these approaches,
or about results obtained from such deployment. Notes
provide additional guidance and clarification.
The spirit of the criteria is perhaps best understood
by examining the core values and concepts that provide
the foundation for integrating the requirements of the
CPE framework. The core values and concepts include:
customer-driven quality, leadership, continuous improve-
ment and learning, valuing employees, fast response,
design quality and prevention, long-range view of the
future, management by fact, partnership development,
company responsibility and citizenship, and results
focus. Indeed, Evans and Ford (1997) found that these
core values and concepts are integrated directly in the
specific requirements of the CPE.
Two examination items comprise the 1999 strategic
planning category: strategy development and strategy
deployment. The strategy development item (NIST
1999, 12) requires an organization to address how
strategy is developed. The criteria require a description
of key steps, participants, and the firms strategy develop-
ment process. Six factors must be considered in the
strategy development process: (1) the customer and
market environment, (2) the competitive environment,
(3) financial and societal risk, (4) human resource
capabilities and needs, (5) company operational capa-
bilities, and (6) supplier/partnership capabilities.
The strategy deployment item (NIST 1999, 13)
focuses on the developed company strategy and its
implementation. Action plans, and related human resource
plans, must be derived from company strategy. A descrip-
tion of the alignment and deployment of critical action
plan requirements through resource allocation,
performance measurement and tracking, and commu-
nicationis sought. Two-to-five year projections of
company performance must also be included. These
projections must be based on the likely changes resulting
from the implementation of company strategy. These
projections should include relevant competitive
comparisons or other benchmarks, and the assump-
tions used in the forecasts.
10 QMJ VOL. 7, NO. 1/ 2000, ASQ
EVOLUTION OF THE STRATEGIC
PLANNING CATEGORY
It is important to understand that the content of the
CPE and the strategic planning category address overall
organizational performance and general business plan-
ning, respectively, although this was not always the
case. Many still dismiss the CPE as narrowly focused on
technical quality management issues. In this section,
the evolution of the strategic planning category is
traced from its inception to its current state.
The Baldrige Award criteria were first issued in
1988. The charter version of the strategic planning
category captured the essence of the models narrow
scope in its formative years. The categorys title,
Strategic Quality Planning, (authors emphasis)
reflected the models focused requirements for planning
in the context of quality and customer satisfaction. The
model required little attention to other business aspects
as part of the planning process. The early Baldrige
Award framework reflected the influence of the popular
quality theorists. In particular, the strategic planning
categorys initial emphasis on planning for quality and
on quality improvement through projects resembled
Jurans (1988, 1989) approach.
By 1990, the strategic planning category reflected
the consolidation that would characterize the Baldrige
Award criterias evolution. Examination items pertaining
to planning functions and planning innovation were
eliminated. The examination items began to distin-
guish between strategy process and strategy content.
Item 3.1 specified assessment of external environment
(customers and competitors) and of internal resources
(process capabilities) as part of the strategic planning
process. The focus was still on planning related to
quality, although this emphasis would soon change.
By 1992, the categorys wording was further
reduced. More important, the strategic planning cate-
gorys scope began to broaden beyond the quality focus.
Examination item 3.1 was renamed Strategic Quality
and Company Performance Planning Process and
item 3.2 became Quality and Performance Plans.
The corresponding areas to address required plans
related to two different areas: the quality plans and the
companys performance plans. The side-by-side
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
appearance of these two sets of plans implied a
relationship that justified their inclusion inside the
same planning process. Two-to-five-year projections of
key performance measures were specified. These projec-
tions needed to include relevant levels and trends of
competitor or other benchmarking data. Efforts to
relate quality planning to other relevant company
plans continued with the 1993 revisions. Explicit refer-
ence to quality goals was reduced. Emphasis was on
developing strategic plans for quality, customer satis-
faction, and waste reduction.
Arguably, the most significant effort to integrate
quality planning with business planning occurred in
the 1995 criteria. Most symbolic was the categorys
revised title: from Strategic Quality Planning to
merely Strategic Planning. This change signaled
major emphasis on business strategy as the most
appropriate view-of-the-future context for managing
performance (NIST 1995, 18). The integration of
quality and operational issues with business planning
became a dominant theme. Explicit reference to quali-
ty planning virtually disappeared. Instead, wording
related to performance, competitive position,
customer-related, and operational prevailed.
The recent versions of the strategic planning cate-
gory reflect the CPEs evolution toward comprehensive
coverage of strategy-driven performance, addressing
the needs of all stakeholderscustomers, employees,
stockholders, suppliers, and the public (NIST 1997b, 31).
The 1998 revision of the strategic planning category
requirements was intended to present an integrated
approach to translation of strategy into action plans
and to strengthen the systems perspective of perfor-
mance planning, plan implementation, and plan
deployment (NIST 1998, 33). What remains is a
generic framework for strategic business planning. One
dimension of the framework addresses the process for
developing strategy. The other dimension relates to
strategic content and its implementation. This was
clarified in 1999 by renaming the two items Strategy
Development and Strategy Deployment.
Similar evolutionary changes were made in the other
categories of the CPE as well. Once representing a func-
tional quality management system, the current criteria
have been repositioned as a general performance
management system. The criterias revised title Criteria
for Performance Excellence, attempts to capture the
business-level scope of the framework (Hertz 1997).
UNDERLYING PROPOSITIONS
AND VALIDITY
Using the areas to address from the criteria, the 1998
version of the CPE strategic planning category has been
translated into five propositions that underpin the
frameworks requirements. Each proposition is examined
in the context of the strategic management literature to
assess how well the strategic planning elements are
grounded in research-based principles.
It should be noted that, until the scope of the strategic
planning category broadened, the authors justification
for reviewing the CPE model in the broad context of
strategic management research was somewhat limited.
After all, strategic quality planning, which proposed
customer-driven quality and operational performance
excellence as an integral part of overall business planning
(NIST 1993, 7), had received little attention in main-
stream strategic research.
Dean and Bowen (1994) proposed that, although
some overlap was apparent, strategic quality planning
as described by older versions of the CPE differed from
extant management theory in a number of dimensions,
including the role of quality in strategy, the importance
of strategy implementation, the focus on customer
needs, and the role of analysis and improvement of
strategic processes. The current scope of the CPE, how-
ever, now qualifies the framework for review against the
strategic management literature. The primary intent of
this research is to determine the extent to which the lit-
erature supports these five fundamental propositions of
the CPE strategic planning framework.
Proposition 1
A definable approach must exist for developing company
strategy. The approach must consider factors related
to the market environment, the competitive environ-
ment, risk, human resource capabilities, company
capabilities, and supplier/partner capabilities.
Proposition 1 relates to the process of strategy
development. In particular, proposition 1 requires a
M. W. FORD AND J. R. EVANS/ 2000, ASQ 11
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
deliberate, definable approach for strategy making.
Proposition 1 also prescribes six factors to be considered
during strategy development: (1) the market environment,
(2) the competitive environment, (3) financial and
societal risk, (4) human resource capabilities and needs,
(5) company capabilities, and (6) supplier/partner
capabilities.
The notion of strategy development as a deliberate
undertaking enveloped much of the early theoretical
conceptualizations of strategic management (Andrews
1971; Ansoff 1965; Chandler 1962; Hofer and Schendel
1978; Learned, et al. 1965). These classic frameworks
generally portrayed the strategist as scanning the external
environment for opportunities and threats, assessing
the firms internal resources and capabilities for strengths
and weaknesses, and determining a strategic plan that
exploited external-internal matches in the context of the
firms objectives. Indeed, researchers who have exam-
ined the historic content of strategy research extracted
common themes of environmental analysis, resource
utilization, and goal attainment from the strategic
management literature (Barney 1997; Bracker 1980).
There has been considerable contention among
theorists, however, on just how formal, linear, or com-
prehensive the strategic planning process is or needs to
be. On one extreme has been the perspective of game
theorists, where a strategist predetermines all choices or
responses to each opposing players move (Saloner
1991; Tirole 1986; von Neumann and Morgenstern 1953).
Other researchers have occupied middle ground.
These theorists have emphasized the iterative nature of
strategic planning, arguing that strategy development
must proceed incrementally to compensate for the
limited cognitive capacity of the planner and for envi-
ronmental complexity (Churchman 1968; Cyert and
March 1963; Lindblom 1959; Mintzberg 1973, 1985;
Quinn 1980). Iterative strategy making may also
nurture technological innovation (Nelson and Winter
1982; Schumpeter 1934), and can allow for considera-
tion of new strategic opportunities that emerge from
unforeseen events (Mintzberg 1978; Mintzberg and
Waters 1985; Pascale 1984; Wrapp 1967).
Few scholars suggest that firm-level strategic objec-
tives are not strengthened by some degree of organized
planning. Some research perspectives, however, downplay
12 QMJ VOL. 7, NO. 1/ 2000, ASQ
the role of strategy development in the performance of
the firm. The classic structure-conduct-performance
framework from industrial organization economics
viewed industry characteristics, rather than individual
firm behavior, as the dominant factor of firm perfor-
mance (Scherer 1970). Another view has argued that
an initially valuable, codifiable process of strategic
planning, once understood and practiced by a number
of firms in an industry, reduces the profit-generating
potential of strategy development, since the routine is
effectively employed by all firms (Schoemaker 1990).
Theorists dedicated to evolutionary and ecological
perspectives of the firm have also questioned the useful-
ness of strategy development, since the firms fate is
viewed as largely determined by evolutionary forces in
the environment; a natural selection process limits the
impact of firm-level strategy (Alchian 1950; Aldrich
1979; Hannan and Freeman 1977).
In their reviews of the strategic management litera-
ture, both Bracker (1980) and Barney (1997) found
that scholars have emphasized the notions of external
environmental scanning and internal capability assess-
ment as part of strategy development. Most classic
strategic planning frameworks commonly have included
three of the six factors specified in proposition 1the
market environment, the competitive environment,
and internal capabilitiesas part of strategy develop-
ment (see, for example, Andrews 1971; Ansoff 1965;
Hofer and Schendel 1978; Learned, et al. 1965). No
scholarly efforts have integrated these factors along
with the other three factors specified by proposition 1
financial and societal risk, human resource capabilities
and needs, and supplier/partner capabilitiesinto a
common framework. Each of the six factors specified
by proposition 1, however, can be traced to other litera-
ture streams that have separately examined the factors
in a strategic planning context. These research streams
relevant to the six factors specified by proposition 1 are
reviewed as follows.
The importance of customer and market scanning
has been a CPE requirement since its inception. This
historic emphasis can be traced to the criterias founda-
tion in total quality managementlistening to customers
and satisfying their needs constituted an essential
message of the popular quality theorists (Crosby 1979;
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
Deming 1986; Juran 1989). However, the importance of
the market environment was noted prior to the popular
quality movement. Simon (1947, 114) argued that, to
survive, an organization must have an objective that
appeals to customers, and that the objectives of cus-
tomers were constantly changing. Lawrence and Lorsch
(1967) observed that attention to customers became
paramount when environmental uncertainty was high.
The interface between the firm and its market environ-
ment has also been the focus of classic scholarly work
in consumer theory (Hicks 1946; Jevons 1879; Lancaster
1966; Marshall 1920; Ricardo 1891; Samuelson 1948;
Smith 1812).
Of course, customer and market focus has been a
traditional domain of marketing scholars (Aaker 1988;
Day 1990; Howard 1983; Levitt 1960, 1969). McKitterick
(1957, 78) argued that marketings purpose was to
make the business do what suits the interests of the
customer. Biggadike (1981) added that the marketing
discipline stressed customers as the focal point of strategy.
The concept of customer focus and its underlying
constructs has gained attention among marketing
researchers (Day 1994; Jaworski and Kohli 1993; Kohli
and Jaworski 1990; Narver and Slater 1990). An impor-
tant notion in these emerging investigations has been
the importance of gathering intelligence from the market
environment, and of its subsequent use by the organi-
zation (see, for example, Kohli and Jaworski 1990).
Strategic assessment of competitive and industry
structure has roots in the industrial organization (IO)
economics literature (Bain 1956; Mason 1939; Scherer
1970), although the notion of external scanning has
certainly been treated in management research streams
(Aguilar 1967; Pfeffer and Salancik 1978). Porter
(1979, 1980, 1985) developed perhaps the most notorious
perspective on strategy development in the context of
the competitive environment and industry analysis.
The competitive analysis literature has become rich
and diversified, ranging from textbooks (Oster 1994) to
articles on strategic industry structural effects (Demsetz
1973; Rumelt 1991; Schmalensee 1985; Wernerfelt and
Montgomery 1988) and competitive positioning (Caves
and Porter 1977; Cool and Schendel 1988; Ghemawat
1986; Porter 1996).
The appropriateness of assessing risk as part of
strategy development can be construed from classical
observations in economics and in the notion of the
relationship between risk and reward. Alchian (1950)
submitted that uncertainty was simply an endogenous
characteristic of the firms environment. Knight (1921)
argued that firms would stand little chance of profit-
ability were it not for unforeseen change and uncer-
tainty. Modern strategy researchers continue to
acknowledge that the uncertainty, complexity, and
conflict that characterized the difficulty of strategic
problems constituted a possible source of profitability
(see, for example, Amit and Schoemaker 1993).
Finance scholars have employed the risk/return
notion in theories of portfolio management (Markowitz
1952) and capital asset pricing models (Lintner 1965;
Sharpe 1964) to help manage financial risk. Brealey
and Meyers (1981), however, admitted to poor under-
standing of risk: return assessment for strategic
decisions from a financial analysis standpoint.
Indeed, problems with applying financial risk theo-
ries to strategic decision making have been noted by
strategy researchers (Bettis 1981, 1983), and paradoxes
between the risk and reward relationship have been
observed in empirical studies (Amit and Wernerfelt
1990; Balakrishnan and Wernerfelt 1986; Bowman
1980; Cool and Schendel 1988). Although a few frame-
works for strategic risk assessment have been proposed
(Baird and Thomas 1985; Mason and Mitroff 1981),
researchers have not coalesced around a unifying
model of strategic risk assessment.
Research support for societal risk consideration
during strategy making has received little direct treatment.
The CPE provide little guidance on what precisely is
meant by societal risk. The criterias inclusion of a
societal risk element likely relates to two core values
that underpin the CPE. Long-range view of the future
views the public and the community as key stakeholders
in the outcomes of strategic decisions (NIST 1998, 41).
Company responsibility and citizenship relates to the
notion that firms should anticipate possible adverse
impacts from the enterprise on the community and to
proactively address these issues (NIST 1998, 42).
Although research has addressed relationships between
a firms socially responsible behavior and performance,
M. W. FORD AND J. R. EVANS/ 2000, ASQ 13
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
there has been little work that explicitly considers the
role of societal risk assessment in the strategy develop-
ment process.
Classic strategic planning frameworks, such as
Andrews (1971) work, treated human resource capa-
bility assessment under the general heading of internal
company assessment. Indeed, the proposition 1 separa-
tion of human resource capability assessment from
other dimensions of company capabilities seems to
violate the parsimony and consolidation that have
characterized the evolution of the CPE. However, such a
separation once again can be related to the criterias
underpinning core values. Valuing employees is a key
factor in organizational performance since a firms
success depends increasingly on the knowledge, skills,
and motivation of the work force (NIST 1998, 41). After
all, it is through the actions of employees that strategy
is realized. By explicitly identifying human resource
capabilities as a stand-alone strategic assessment
factor, the criteria highlight the importance of this
asset class to effective performance management.
A number of research streams support the consider-
ation of human resources in the strategic planning
context. One stream relates to the importance of
enhancing the strategic skills of the firms managers.
Managerial development has been cited as important
for both strategy formulation (Andrews 1971; Bartlett
and Ghoshal 1993; Hambrick 1995; Hambrick and
Mason 1984; Mintzberg 1973; Norburn and Birley
1988; Rumelt 1974) and for strategy implementation
(Kerr and Jackofsky 1989).
A second stream relates to the resource-based view
of the firm. Penrose (1959) portrayed the firm as a pool
of resources, and resources as bundles of potential
services or activities. Profits, or rents, accrue from
unique or idiosyncratic resources owned or controlled
by the firm (Barney 1986, 1991; Dierickx and Cool
1989; Peteraf 1993). Since people represent one asset
class controlled by the firm (Barney 1991; Grant 1991;
Hofer and Schendel 1978; Mahoney and Pandian
1992), human resources merit attention for strategic
development.
A third stream flows from the human resource (HR)
literature. Frameworks have been proposed to better
integrate human resource planning and strategy
14 QMJ VOL. 7, NO. 1/ 2000, ASQ
(Lengnick-Hall and Lengnick-Hall 1988; Peck 1994;
Schuler 1992). Schneider and Bowen (1993) justified
more connection between human resource planning
and strategy in the context of the firms increased interest
on service-based sources of competitive advantage.
The notion of competitive advantage as stemming
from firm-specific skills and resources can be traced to
early economic thought (Ricardo 1891), as well as to
early theoretical treatments of firm heterogeneity and
growth (Chamberlin 1933; Heflebower 1954; Penrose
1959; Selznick 1957). Most strategic theorists have
noted the importance of taking stock of internal
resources as part of strategy development. Ansoff
(1965) advised that firms develop a resource profile
during strategy formulation. Hofer and Schendel
(1978) highlighted internal resource and competence
assessment as a primary activity in strategy develop-
ment. Recently, the stream of research related to the
resource-based view of the firm has emphasized the
assessment and development of valuable, unique, and
inimitable resources as a critical source of sustainable
competitive advantage (Barney 1986, 1991; Conner
1991; Dierickx and Cool 1989; Prahalad and Hamel
1990; Wernerfelt 1984).
Supplier/partner capabilities Various aspects
of cooperative arrangements have been researched,
such as supplier relationships and procurement
practices (Ebrahimpour and Mangiameli 1990; Heide
and John 1990; Kalwani and Narayandas 1995; Kekre,
Murthi, and Srinivasan 1995; Sinha and Cusumano
1991); forms of strategic alliances (Borys and Jemison
1989; Hamel 1991; Harrigan 1988; Kamath and Liker
1994; Ring and Van de Ven 1992); and the effects of
cooperative arrangements on inter-party exchange
costs (Barnard 1938; Jones and Hill 1988; Robins 1987;
Williamson 1975, 1979, 1991). Little research, however,
has directly examined the role of supplier/partner
assessment as part of strategy development. Hofer and
Schendel (1978, 150) provided a notable exception,
claiming that analysis of internal resources should be
extended to major subcontractors. Indeed, supplier/
partner capabilities may be viewed as another asset
class under the general heading of internal firm capa-
bilities. The criterias choice to explicitly separate this
asset class as a stand-alone factor in strategy development
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria

Table 1 Summary of literature related to proposition 1.

Proposition Supporting literature streams Representative work

Strategy development as a
deliberate process
Classic strategic management frameworks
Game theory
Adaptive nature of planning
Environment influence on planning
Andrews (1971); Ansoff (1965); Hofer and
Schendel (1978)
Saloner (1991); Tirole (1986); von Neumann
and Morgenstern (1953)
Churchman (1968); Cyert and March (1963);
Lindblom (1959); Mintzberg (1973, 1978);
Pascale (1984); Wrapp (1967)
Alchian (1950); Aldrich (1979); Hannan and
Freeman (1977); Scherer (1970); Schoemaker (1990)

Six factors considered in strategy
development:
1. Market environment
2. Competitive environment
3. Financial and societal risk
4. Human resource capabilities
5. Company capabilities
6. Supplier/partner capabilities
General environmental scanning Aguilar (1967); Pfeffer and Salancik (1978)
Quality management Crosby (1979); Deming (1986); Juran (1989)
Organization theory Lawrence & Lorsch (1967); Simon (1947)
Consumer theory Hicks (1946); Lancaster (1966); Marshall (1920);
Ricardo (1891); Samuelson (1948)
Market orientation Day (1994); Howard (1983); Kohli & Jaworski (1990);
Levitt (1960, 1969); McKitterick (1957); Narver
and Slater (1990)
Industrial organization and competitive Bain (1956); Porter (1980); Oster (1994);
analysis Scherer (1970)
Uncertain environment and the firm Alchian (1950); Knight (1921)
Financial risk theory Brealey and Myers (1981); Lintner (1965);
Markowitz (1952); Sharpe (1964)
Strategic risk assessment Baird and Thomas (1985); Bettis (1981, 1983);,
Mason and Mitroff (1981)
Managerial development Andrews (1971); Bartlett and Ghoshal (1993);
Hambrick (1995); Kerr and Jackofsky (1989);
Norburn and Birley (1988); Selznick (1957)
Resource-based view Barney (1991); Grant (1991); Hofer and
Schendel (1978); Mahoney and Pandian (1992);
Penrose (1959)
Strategic human resources Lengnick-Hall and Lengnick-Hall (1988); Peck (1994);
Schneider and Bowen (1993); Schuler (1992)
Classic strategy frameworks Andrews (1971); Ansoff (1965); Hofer and
Schendel (1978)
Resource-based view Barney (1991); Conner (1991); Dierickx and
Cool (1989); Penrose (1959); Prahalad and
Hamel (1990); Wernerfelt (1984)
Supplier/partner relationships Ebrahimpour and Mangiameli (1990); Heide and
2000, ASQ

John (1990); Sinha and Cusamano (1991)

Strategic supplier assessment Hofer and Schendel (1978)

likely relates to the CPE core value of partnership
development, which promotes partnerships as a way
for the firm to better accomplish its overall goals (NIST
1998, 42).
Summary Also see Table 1. Proposition 1 addresses
the strategy development process. Strategy as a deliberate,
definable undertaking has constituted an essential
element of classical strategic management frameworks
developed by strategy scholars. Although scholars tend
to disagree on just how formal or linear, the strategy
development process needs to be, the general format of
proposition 1 is robust enough to accommodate these

M. W. FORD AND J. R. EVANS/ 2000, ASQ 15

 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
various research perspectives. Indeed, the CPE explicitly
note that the requirements do not imply formalized
plans, planning systems, departments, or specific planning
cycles, nor does the strategic planning category imply
that all improvements could or should be planned in
advance (NIST 1998, 23).
There is no single literature stream that supports an
integration of the six factors required by proposition 1
as part of strategy development. Three of the six
factorsmarket environment, competitive environment,
and company capabilitiespervade most scholarly
frameworks on strategy formulation. However, the other
three factors specified by proposition 1financial and
societal risk, human resource capabilities, and supplier/
partner capabilitiesgain only indirect support from
the strategy literature. The criterias specification of
human resource capabilities and supplier/partner
capabilities appears somewhat redundant, since these
factors are asset classes that can be appropriately filed
under the internal capabilities factor. These two factors,
along with the factor dealing with risk assessment, perhaps
garner explicit mention in proposition 1 as a means to
operationalize core values that underpin the criteria.
Proposition 2
Company strategy must be defined. Action plans
must be derived from strategy. Human resource
plans related to the action plans must be included.
Differences between short- and longer-range plans
must be recognized and understood.
Proposition 2 addresses a critical outcome of the
strategy development process: the strategic plan.
Scholars sometimes refer to this notion as strategic
content. Proposition 2 prescribes little in terms of what
a strategy should contain. The focus, rather, is the
notion of action plans derived from strategy and
strategy development. Proposition 2 also requires the
inclusion of human resource plans related to strategy.
Finally, proposition 2 requires an explicit separation of
short- and longer-term plans.
Proposition 2 provides little detail as to what a strategy
or an action plan should contain, or what form it
should take. Such a nonprescriptive stance fits a broad
range of literature perspectives, since scholars have
16 QMJ VOL. 7, NO. 1/ 2000, ASQ
proposed many purposes and forms of strategy. In their
review of the strategy literature, Hax and Majuf (1988)
found that research perspectives on the purpose of
strategy have included the following: to establish
organizational purpose, to define the firms competitive
domain, to serve as a unifying blueprint of the organi-
zation, to respond to environmental stimuli, and to
motivate stakeholders. Other interpretations of the liter-
ature have included strategy as plans for cooperation as
well as for competition (Barney 1997; Brandenburger
and Nalebuff 1996); as a means to reduce environmental
uncertainties and interdependencies (Pfeffer and
Salancik 1978); as plans for growth (Penrose 1959); as
a means to reduce transaction and governance costs
(Williamson 1975, 1991); as plans to encourage tech-
nology development and innovation (Nelson and Winter
1982; Schumpeter 1934); as actions that support the
development of tacit strategic assets (Itami 1987); and
as a bridge to corporate tradition and history (Ouchi
1980; Smircich and Stubbart 1985; Weick 1979).
What form should strategy take? Apart from a
straightforward, rationally stated plan, strategies may
assume eclectic forms as well (Barney 1997).
Mintzberg (1987) proposed that a strategy could repre-
sent a ploy, pattern, position, or perspective as well as a
plan. Cyert and March (1963) claimed that a strategy
could be a goal, schedule, theory, or precedent. To
some, a strategy has been better understood via patterns
of actual behavior rather than by stated plans (Andrews
1971; Barnard 1938; Mintzberg 1978; Simon 1947;
Weick and Roberts 1993).
Various systems for classifying strategies have been
developed. Some classifications attempt to capture unique
aspects of the firms strategic behavior (Chrisman,
Hofer, and Boulton 1988; Miles and Snow 1978;
Mintzberg 1988, 1-67; Porter 1980, 1985). Other frame-
works have been based on paths for firm growth, such
as diversification, vertical integration, mergers and
acquisitions, and strategic alliances (Borys and Jemison
1989; Harrigan 1985, 1988; Jones and Hill 1988;
Mahoney 1992; Montgomery and Wernerfelt 1988;
Rumelt 1974, 1982; Singh and Montgomery 1987).
This medley points out that considerable research
attention has been dedicated toward analyzing strategic
content, although literature perspectives vary considerably.
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
Proposition 2 requires that strategy and action plans must
exist, and that these plans must be based on strategic
process. The general nature of the CPE framework
provides a wide tolerance for accommodating various
research perspectives on strategic content.
Rather than requiring an elaboration of company
strategy, the CPE strategic planning framework focuses
instead on the specification of action plans derived
from strategy. The criteria characterize action plans as
defining those things the company must do well for its
strategy to succeed (NIST 1998, 3). Further, the CPE
claim that action plan development represents the
critical stage in planning when general strategies and
goals are made specific so that effective company-wide
understanding and deployment are possible (NIST
1998, 3). This would seem to indicate a preference in the
CPE for defining how a strategy is to be accomplished
rather than defining what the company strategy is.
The criteria, however, proceed to cite that an
example of an action plan element for a supplier in a
highly competitive industry might be to develop and
maintain a price leadership position (NIST 1998, 3).
Many strategy scholars might regard this as a basic
statement of strategy, rather than as an actionable item
derived from a higher-level strategic objective. Indeed,
the price leadership example provided by the CPE
resembles a generic business strategy espoused by
Porter (1980, 1985).
It must be noted, then, that the meaning of an action
plan is unclear in the context of the CPE. Although an
action plan implies a tactical connotation, the example
of an action plan provided by the criteria resembles a
statement of a general business goal or objective. With
this in mind, the literature that considers the transla-
tion of strategy into plans for action is now reviewed.
A common notion among theorists has been that
strategy must be reduced to actionable tasks for effec-
tive implementation. Barnard (1938) argued that an
organizations purpose must be broken into fragments
ordered in time and assignment to allow for execution
via specialized units of organization. Quinn (1980)
proposed that effective formal strategies include the
major action sequences necessary to accomplish the
defined goals. Simon (1947) observed that all organi-
zations have multiple goals existing in a complex hier-
archy or pyramideach levels goals relate to the step
above, and the low levels in the hierarchy execute the
goals. March and Simon (1958) argued that organiza-
tions must reduce complex objectives into simple
programs and rules to reduce the uncertainty and con-
flict involved with survival. Action plans can be considered
as the necessary specification of present period activity
to bridge the adaptive learning process between planning
cycles (Nelson and Winter 1982; Weick 1979). Likert
(1961) viewed unit objectives and goals as linking
pins that harmonized organizational levels. Others
viewed development of short-term plans as necessary
components of an effective management control system
(Anthony 1961; Lorange and Scott Morton 1974).
The requirement in proposition 2 for an elaboration
of human resource plans derived from strategy extends
the discussion of explicit mention of human resources
as part of strategic planning in proposition 1. Plans
that require the strategic deployment of human resources
would appear a subset of action plans in general. The
explicit requirement for defining human resource
plans derived from strategy is likely another opera-
tionalization of the criterias core value of valuing
people. The research stream that most directly supports
this view is emerging from researchers who have been
examining the importance of human resource planning
in the context of strategy (Lengnick-Hall and
Lengnick-Hall 1988, 1993; Nkomo 1987; Peck 1994;
Schuler and Jackson 1989).
There is only scattered discussion in the literature
about the necessity for differentiating between short-
and longer-term strategic objectives. Indirectly, such a
requirement can be viewed as an extension of the
argument for fragmenting strategic goals into doable
pieces. Hrebeniak and Joyce (1984) differentiated
between the adaptation horizon and the implementa-
tion horizon. The adaptation horizon was the time that
a strategic opportunity or threat persists, while the
implementation horizon was the planners perception
of the adaptation horizon. Usually, the implementation
horizon was shorter than the adaptation horizon. A
specification of two time horizons can be viewed as
another means for dividing complex, abstract strategies
into doable, concrete action plans. The shorter time
horizon represents the tangible realization of an
abstract future state.
M. W. FORD AND J. R. EVANS/ 2000, ASQ 17
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
Summary Also see Table 2. Proposition 2 focuses
on company strategy and action plans. The general
form of proposition 2 broadly fits research notions of
strategic content. The CPE are unclear as to what is
meant between strategy and action plans, although
there appears to be a bias toward concrete, tactical
plans. Scholars have conceptualized the fragmenting of
strategic goals into doable pieces. The proposition 2
requirement for human resource plans as part of
strategic content appears to be a redundant subset of
action plans; the explicit requirement is likely another
reinforcement of the core values of the CPE. The specifica-
tion for differentiating between short- and longer-term
plans garners little direct literature support, although
the notion can be indirectly linked to the general
concept of dividing strategic goals into doable pieces.
Proposition 3
An approach must exist for implementing (deploy-
ing) action plans. The approach must consider how
critical requirementsincluding human resource
plans, key processes, performance measures, and
resourceswill be aligned and deployed.
Proposition 3 focuses on the structure for imple-
menting strategy. Proposition 3 requires that the critical
Table 2 Summary of literature related to proposition 2.
Proposition Supporting literature streams
Nonprescriptive strategy content Purpose of strategy
Forms of strategy
Strategy typologies
Focus on action plans Organization theory
Managerial control systems
Inclusion of human resource plans Strategic human resources
Differentiating between short- and Strategy implementation
longer-term
18 QMJ VOL. 7, NO. 1/ 2000, ASQ
requirements for implementing action plansincluding
human resource plans, key processes, performance
measures, and resourcesmust be aligned and deployed.
Hrebeniak and Joyce (1984) argued that much has
been written about strategy implementation, but
because of the literatures scatter among various
disciplines, its disaggregated state masked implementa-
tions true identity. Indeed, Anthony (1961) noted that
while strategic planning was rooted in economics, strat-
egy implementation related more to social psychology.
Chandler (1962) was an early observer of the rela-
tionship between an organizations structure and the
firms capability for effectively achieving its strategic
goals. Andrews (1971) noted that structure for imple-
mentation related not only to division of work and
coordination of responsibility, but also to organizational
systems such as standards and measurement, incentives,
control systems, and personnel recruitment. Daft and
Macintosh (1984) are among a number of researchers
who have found support for the role of managerial
systems, particularly those connected to middle manage-
ment, in strategy implementation.
Galbraith (1973) argued that the firms choice of
structure related to uncertainty and information processing
associated with a particular choice of strategy. March
and Simon (1958) added that structural characteristics
Representative work
Barney (1997); Brandenburger and Nalebuff (1995);
Hax and Majuf (1988); Itami (1987); Nelson and
Winter (1982); Pfeffer and Salancik (1978);
Smircich and Stubbart (1985); Weick (1979)
Andrews (1971); Barney (1997); Cyert and
March (1963); Mintzberg (1987)
Harrigan (1985, 1988), Miles and Snow (1978);
Mintzberg (1988, 1 67); Porter (1980, 1985);
Rumelt (1974)
Barnard (1938); Likert (1961); March and
Simon (1958); Quinn (1980); Simon (1947);
Weick (1979)
Anthony (1961); Lorange and Scott Morton (1974)
Lengnick-Hall and Lengnick-Hall (1988);
Nkomo (1987); Peck (1994); Schuler and
Jackson (1989)
2000, ASQ
Hrebeniak and Joyce (1984)
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria

related to cognitive constraints inherent to managing
strategic process. A number of researchers have pre-
scribed particular strategy-structure matches
(Galbraith 1995; Kukalis 1989; Nathanson, Kazanjian,
and Galbraith 1979, 91113).
Summary Also see Table 3. Proposition 3 attracts
support from varied research perspectives on strategy
implementation. Structure must exist to implement strategy.
Structure includes the organizational and administrative
capabilities to effectively deploy strategic objectives.
Proposition 4
An approach must exist for monitoring company
performance relative to the strategic plan.
Proposition 4 requires an organized approach for
monitoring the firms performance in the context of its
strategic objectives.
According to Tannenbaum (1968, 1), organization
implied control. Newman (1940) viewed the primary
roles of the administrator as plan-direct-control. The
concept of tracking performance versus objectives
received formal treatment by researchers involved with
managerial control systems (Anthony 1961; Forrester
1958; Hurst 1979, 114123; Lorange and Scott Morton
1974) and by systems theorists (Ackoff 1970;
Churchman 1968). Forrester (1958) portrayed industrial
and economic activities as closed-loop feedback systems.
Anthony (1961) viewed management controls as a
means to ensure that resources were obtained and used
effectively in the accomplishment of the organizations
objectives. Such controls facilitated goal congruence.
Lorange and Scott Morton (1974) viewed short-term
performance tracking as a process, lodged between
short-term goal setting and the next periods long-range
planning process.
While the proposition 4 notion of performance
tracking and control fits nicely with control and systems
theory, the concept can also be related to other perspec-
tives. Performance tracking and control can be viewed
as governance structure associated with reducing internal
transaction costs (Coase 1937; Williamson 1975, 1979).
Monitoring can also be linked to the agency problem
ensuring that actors stay aligned with the principles
goals (Cyert and March 1963; Eisenhardt 1989; Jensen
and Meckling 1976; March and Simon 1958).
Summary Also see Table 4. Proposition 4 garners
considerable literature support, particularly from the
perspective of managerial control systems. This literature
links performance monitoring to the function of
managerial control. Proposition 4 requires only specifi-
cation of how performance will be tracked; proposition 4,

Table 3 Summary of literature related to proposition 3.

Proposition Supporting literature streams Representative work

Structure for implementation Classic strategic planning frameworks Andrews (1971); Chandler (1962)
Organization theory Daft and Macintosh (1984); Galbraith (1973);
2000, ASQ

Kukalis (1991); March and Simon (1958)

Strategy implementation Hrebeniak & Joyce (1984)

Table 4 Summary of literature related to proposition 4.

Proposition Supporting literature streams Representative work

Monitoring performance
Managerial control systems and
systems theory
Administrative behavior
Ackoff (1970); Anthony (1961); Churchman
(1968); Forrester (1958); Hurst (1979);
Lorange and Scott Morton (1974)
Newman (1940); Tannenbaum (1968)
2000, ASQ

Transaction cost theory Coase (1937); Williamson (1975, 1979)

Agency theory Eisenhardt (1989); Jensen and Meckling (1976);
March and Simon (1958)

M. W. FORD AND J. R. EVANS/ 2000, ASQ 19

 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
and the other propositions that embody the CPE strate-
gic planning framework, do not explicitly address the
issue of control.
Proposition 5
Strategy-related changes in key indicators of company
performance must be projected. These projections
must include relevant comparisons to competitors
or other benchmarks, and the assumptions used in
the projections.
The essence of proposition 5 involves the role of
performance measures in strategic planning. Strategic
measures of organizational performance must be iden-
tified. Changes in organizational performance must be
projected into the future, and the assumptions behind
those projections must be recognized. Proposition 5
also requires the inclusion of comparative benchmarks
in the projections.
Hrebiniak and Joyce (1984) argued that if a strate-
gic outcome variable were not measurable, then
managers would have difficulty assessing the difference
between actual performance and the intended state.
Systems theorists stressed measurable objectives to
facilitate control and realization of the objective func-
tion (Ackoff 1970; Churchman 1968). Objective
measures of performance form an essential part of the
information-handling process that supports managerial
and operational control (Anthony 1961). Hurst (1979,
Table 5 Summary of literature related to proposition 5.
Proposition Supporting literature streams
Key performance measures Managerial control systems and
systems theory
Administrative behavior
Strategy evaluation
Future projections Strategic forecasting
Assumption-stating Systems theory
Strategy development
Competitive and benchmark Environmental scanning
comparisons
Competitive analysis
Quality management
20 QMJ VOL. 7, NO. 1/ 2000, ASQ
114 123) noted that such measures were oriented
toward the future and measured the accuracy of the
strategic decision premise. Lorange and Scott Morton
(1974) claimed that these measures could be financial
or nonfinancial, and were necessary for control and
goal congruence. Likert (1961) advised that an organi-
zation should focus on key performance measures and
indicators, lest managers would be buried under moun-
tains of data. Hofer and Schendel (1978) discussed at
length the measurement and evaluation of strategic
goals. Recent work has proposed the identification and
use of key indicators of market, operational, and financial
performance to provide a balanced scorecard of
performance measurements (Kaplan and Norton 1992).
It is important to note that proposition 4 does not
focus on the planning horizon for strategy, but on the
projection horizon for key strategic measures. The
development of future projections can be related to
forecasting. Schoemaker (1991) noted that strategic
forecasting techniques included decision analysis,
scenario planning, and statistical techniques.
Fahey and King (1981) found that firms utilized
relatively rudimentary forecasting techniques as part of
planning. Scholars, however, have been interested in
applying more formal forecasting methods to strategic
process (Utterback 1979, 134 144). Schoemaker
(1991, 1993), for instance, has promoted multiple
scenario planning as a technique for strategic forecasting.
Makridakis (1996) argued the merits of traditional
Representative work
Ackoff (1970); Anthony (1961); Churchman (1968);
Hurst (1979); Lorange and Scott Morton (1974)
Likert (1961)
Hofer and Schendel (1978); Hrebiniak and Joyce
(1984); Kaplan and Norton (1992)
Fahey and King (1981); Makridakis (1996),
Schoemaker (1991), Utterback (1979, 134 144)
Churchman (1968)
Mason and Mitroff (1981)
Aguilar (1967)
2000, ASQ
Oster (1994); Porter (1980)
Tucker, Zivan, and Camp (1987)
 Conceptual Foundations of Strategic Planning in the Malcolm Baldrige Criteria
statistical time series forecasting methods to augment
strategic planning.
Scant research supports proposition 5s specification
for a specific two-to-five-year projection interval.
Statisticians who use time series forecasting methods
are often wary of extending a realization more than
one or two steps ahead into the future, since confidence
intervals surrounding the estimates tend to quickly
widen (Pankratz 1983).
Articulating the assumptions behind strategic pro-
jections and claims has been espoused by systems
theorists and by some strategy researchers. Churchman
(1968) argued that continuously questioning the
assumptions was critical to systems thinking. Mason
and Mitroff (1981) specified strategic assumption
surfacing and testing as a core activity in the strategy
development process.
The incorporation of competitive or benchmark
comparisons in strategic performance projections can
be indirectly linked to the proposition 1 requirement
for industry and competitive scanning (Aguilar 1967;
Porter 1980, 1985). The concept of benchmarking is
commonly associated with the rise in the quality movement
(see Tucker, Zivan, and Camp 1987 for an overview);
although formal research on the use of benchmarks in
strategic contexts has been minimal (Delbridge, Lowe,
and Oliver 1995).
Summary Also see Table 5. The general notion of
employing performance measures in strategic manage-
ment garners wide and varied literature support. The
most compelling support, perhaps, relates to the notion
that measurements provide objective information for
managers to judge how well the organization is perform-
ing in comparison to strategic targets, and to signal the
need for corrective action. Stating the assumptions
behind strategic projections has some grounding in
systems theory and in some strategy development liter-
ature. The proposition 5 specification for multiyear
performance projections cannot be related to a specific
literature stream, although scattered support comes
from research in strategic decision making and in
forecasting methodology. Inclusion of competitive
comparisons and other benchmarks in performance
projections can be indirectly related the proposition 1
requirement for industry and competitive scanning as
part of strategy development.
CONCLUDING REMARKS
It has been demonstrated that the strategic planning
framework embedded in the Malcolm Baldrige Criteria
for Performance Excellence (CPE) aligns considerably
with the conceptual literature on strategic planning.
This alignment brings some theoretical validity to the
strategic planning framework embodied by the CPE. A
similar approach with other CPE categories (leader-
ship, customer focus, and so on) would likely reveal a
similar scholarly basis for the overall CPE framework.
Of course, researchers could advance the frame-
works validity through more CPE-specific research. It
is suggested, however, that researchers attend to the
multifunctional grounding of the CPE. The literature
base of the CPE is broad and most certainly extends
beyond the articles that contain quality as a key word.
For example, in this investigation of strategic planning,
the authors drew from mainstream strategic manage-
ment literatureand from more distant streams such
as forecasting and systems theory. The general business
scope of the CPE framework overlaps a variety of func-
tional disciplines to form an integrative model of
organizational effectiveness.
A relationship between the CPE framework and rich
stream of scholarly literature has been demonstrated.
Such validity might inspire further research efforts. On
a practical level, the CPEs grounding in the literature
reflects the translation of research into managerial practice.
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BIOGRAPHIES
Matthew W. Ford is a doctoral candidate in operations manage-
ment at the University of Cincinnati. Until 1995, he was a corpo-
rate quality systems manager with a FORTUNE 500 manufacturer.
He can be contacted at the Department of Quantitative Analysis
and Operations Management, College of Business
Administration, University of Cincinnati, P.O. Box 210130,
Cincinnati, OH 45221-0130; Telephone: 513-556-7052; Fax:
513-556-5499; E-mail: fordmw@email.uc.edu .
James R. Evans is a professor in the Department of Quantitative
Analysis and Operations Management and is the director of the
Total Quality Management Center in the College of Business
Administration at the University of Cincinnati. He has also served
as an examiner and senior examiner for the Malcolm Baldrige
National Quality Award from 1994 through 1999.
Evans earned a doctorate in industrial and systems engineering
from the Georgia Institute of Technology. He may be contacted at
the University of Cincinnati, P.O. Box 210130, Cincinnati, OH
45221-0130; Telephone: 513-556-7152; Fax: 513-556-5499;
E-mail: evansjr@email.uc.edu .