Mint Condition

Philip N. Diehl makes change -- literally. As director of the United States Mint, he and his colleagues produce roughly 20 billion circulating coins per year -- those nickels, dimes, and quarters that jingle in your pockets and feed parking meters. They also manufacture and sell collectibles, commemoratives, and bullion coins. With annual revenues of $2.5 billion, 2,200 employees, and four manufacturing plants, the Mint makes money by making money.

More important, Philip Diehl knows how to make change -- deep-seated, far-reaching, this-feels-like-a-different-place kind of change. When he took charge of the Mint in September 1994, the agency lived up to every negative stereotype of a government bureaucracy. It was inefficient, slow moving, and utterly clueless about the standards of performance in the business world. One telling example: The Mint's primary responsibility is to keep an adequate supply of coins in circulation on behalf of its main customer, the Federal Reserve System. But six years ago, no one at the Mint could tell you how many coins were in its inventory.

Not that many Mint officials thought it was a big problem. Diehl remembers his first visit to the agency's headquarters, shortly after he was appointed by President Clinton. "I got to the building a little after 5 PM, and the hallways were empty. There wasn't a person in sight. I actually called my wife and told her that there must have been a bomb scare; but there wasn't. It was just business as usual at this sleepy, 201-year-old government agency that had lost its passion."

Today, the Mint is exploding every stereotype of a government agency -- and is setting a standard for performance and improvement that would be the envy of most private companies. Are you trying to improve customer relations? According to the influential American Customer Satisfaction Index, the Mint now ranks second only to Mercedes-Benz North America in customer satisfaction. Are you trying to create new lines of business from your existing people and assets? The Mint is turning its police force -- the folks who, among other responsibilities, guard Fort Knox -- into a revenue-generating unit that sells its services to other federal agencies and to foreign governments. It has also launched a new product line -- the heralded 50 State Quarters Program -- that is attracting a new generation of young collectors. What's more, the Mint has gone ".com" in a big way -- using the Web to generate customer feedback on coin designs and taking the "eBay approach" to sell collectibles online.

"We've fundamentally changed people's expectations of our performance," Diehl declares with obvious satisfaction. "We've changed the expectations of our stakeholders on Capitol Hill. We've changed the expectations of our employees in terms of how they're treated. And we've changed our customers' expectations of our performance. In the old days, we shipped fewer than 50% of our orders within eight weeks. Today, if it takes two weeks for customers to receive an order, they complain. When you change expectations, it's very hard for an organization to relax and slip back into old patterns of behavior."

Diehl, 48, whose nearly six-year tenure is drawing to a close, believes that the Mint's transformation is comparable to some of the better-known change programs in a private sector. It's hard to argue with his assessment. "I was sitting in my staff meeting yesterday afternoon," he says. "I was listening to my director of marketing describe the huge demand for our products and all the things we're doing on the Web. We've had three straight weeks of million-dollar sales on the Web, and I fully expect that we'll soon have our first million-dollar day. I told the folks who were around that table, 'If this were a company, a bunch of you would be IPO millionaires -- just based on what we've done over the past six months.' And that's the remarkable thing about what's happened. People have achieved this huge turnaround without any of the traditional incentives that companies use. Folks here get modest bonuses and free jackets. They're not doing it for the money."

Change Customer Expectations

Philip Diehl cuts an imposing figure. He's tall, with a full head of jet-black hair, a confident voice, and a slight Texas twang. He arrived at the Mint with an impressive background: former chief of staff of the Senate Finance Committee and Lloyd Bentsen's first chief of staff during Bentsen's tenure as secretary of the treasury. In other words, Diehl could have spent his early days as director of the Mint making bold declarations, big promises, perhaps even dire threats. But as a change agent who is in it for the long term, he chose another path.