Part 1: When Customers Actually Mattered

Yesterday, I asked a simple question: Why do boards not care about customers? Customers are the ones buying the product, funding the growth, and keeping the lights on. And yet, in most boardrooms, they’re a ghost.

I had my theory. Greed. Short-term thinking. The usual. But after digging deeper, I found the real reason.

Boards don’t ignore customers by accident. They ignore them because customers aren’t their real audience. Their real audience is shareholders. And not the mom-and-pop investors you’re picturing. I’m talking about the massive institutional investors—mutual funds, pension funds, passive indexers—the ones who control the company.

Those shareholders have a very clear list of priorities. “Delivering a quality customer experience” isn’t on it.

It wasn’t always this way.

There was a time when customer excellence wasn’t just a marketing bullet. It was a strategic, board-level bragging right. A symbol of operational strength and it existed because it was structurally incentivized by the U.S. government.

It was called the Malcolm Baldrige National Quality Award.

A Nation at Risk

To understand why the Baldrige Award mattered, you have to understand the panic of the 1980s.

America was getting its ass kicked.

After decades of global dominance, U.S. manufacturing was in a state of crisis. Japanese competitors, in particular, were shipping superior products at better prices, and U.S. companies were bleeding market share in everything from cars to electronics.

This wasn't just a commercial problem; it was seen as a direct threat to national economic security. Poor quality was a systemic financial drain, costing companies as much as 20% of their sales revenue.

The U.S. was in a "quality crisis", and Congress decided to intervene.

In 1987, President Reagan signed the Malcolm Baldrige National Quality Improvement Act. This wasn't a friendly suggestion. It was a "direct strategic intervention"—a deliberate act of industrial policy to force American companies to get their act together.

The Baldrige Award was born. And for a solid decade, it was the "highest presidential honor for performance excellence".

Why It Actually Worked

The Baldrige wasn't just a trophy. It was a "comprehensive and rigorous framework"—a holistic blueprint for running an entire organization. And it was revolutionary for one reason: it forced the customer into the boardroom.

This wasn't some soft-focus mission statement. The framework was a weapon.

The "Leadership" category demanded a customer-focused vision from the top. "Strategy" demanded a plan to execute it.

This is where it gets serious: the "Results" category accounted for a massive 450 out of 1,000 points. Nearly half the award's score came from proving your outcomes in customer satisfaction, retention, and market share.

You couldn't win by paying lip service. You had to provide hard data. This structure made it impossible for a board to ignore the customer—it created a "direct, measurable line of accountability from strategic intent to tangible customer outcomes".

The Ultimate Bragging Right

Because the Baldrige was a presidential honor, it had "unparalleled signaling power". For a board of directors, winning was the ultimate tool for communicating excellence to the public, employees, and the market.

It was, in short, a massive bragging right.

This was how boards impressed their shareholders. It was a public, government-backed validation that the company was world-class, managed for the long term, and committed to quality, making customer excellence impossible to ignore.

And the winners treated it that way:

• Motorola (Winner, 1988): In their 1989 annual report, leadership explicitly called the award "appropriate recognition" for achieving their "fundamental objective of Total Customer Satisfaction".

• FedEx (Winner, 1990): The first service company to win. Their 1991 Annual Report was proudly titled "Malcolm Baldrige Award Winner". CEO Frederick W. Smith used it to galvanize all 90,000 employees around a mission of "100 percent customer satisfaction".

• The Ritz-Carlton (Winner, 1992 & 1999): This win proved that "customer excellence" was a hard, strategic asset in the service industry, not just a manufacturing metric.

This was the "golden age". Companies were competing to prove who was best at listening to customers and building systems to serve them.

But even at its peak, a tension was emerging—a conflict between the Baldrige philosophy of long-term, systemic value and an emerging market focus on short-term, quantifiable financial results.

This wasn’t about leaders suddenly caring less. The power structure changed and when power moves, so does attention.

The audience for corporate performance was about to change. And the customer was about to get kicked out of the room.

In Part 2: We’ll track the seismic shift in corporate ownership and how the rise of institutional shareholders made the customer irrelevant.