Business Excellence Model
description
Transcript of Business Excellence Model
An attempt to create new model in Business Excellence
overviewing the Global
Business Excellence Models and Frameworks
By:
Laleh Rezaie Adl, B.E. in Industrial Eng, Iran University of
Science and Technology.
May 2006
Abstract
Truly excellent organizations are those who strive to satisfy their
stakeholders by what they achieve, how they achieve and what they are likely
to achieve. This is hard enough at the best of times; sustaining success in a
world of increasing global competition, rapid technological innovation,
changing processes and frequent momentum in the economic, social and customer
focused environments.
In the last decade of the past century, a rapidly growing number of Business
Excellence Models has emerged, which all claim to describe the road to
excellence organizational performance.
Business Excellence (BE) is a systematic approach to achieving and sustaining
business improvement and organizational growth. The BE Frameworks is based on
total quality management principles, particularly the focus on balancing
stakeholder interests, collaborative and continuous improvement. As BE is
associated with the application of BE models and frameworks, organizations
utilize them leading enhancement, achieving improved Business results and
increasing the likelihood of long term survival.
BE frameworks are also used as the Criteria to measure progress for a number
of business awards.
In USA, firms that account for three fifths of the dollar value of the US
economy, have some connection with BE frameworks particularly Baldrige
Framework. In New Zealand, major public and private large service
organizations are adopting themselves with BE models and frameworks.
This paper is an attempt to introduce the global and most frequently used BE
models and frameworks. It provides an overview to two international known BE
Frameworks and four models and, then describing a new approach to “Pand
Business Excellence Model (PBEM)”, a BE model which shows the change in
excellence models, Innovated by Pand Communication Co.
A Glance on BE Models and Frameworks
Australian Business Excellence Framework (ABEF)
is an integrated leadership and management
system that describes the essential features,
characteristics and approaches of organizational
systems that promote sustainable, excellent
performance. The Framework reflects the
interconnected nature of all parts of the
management system of an organization which
provides both a design and a diagnostic tool.
The foundation of this Framework consists of 12
Business Excellence Principles to provide a
powerful and integrated philosophy of leadership
and defines 7 Performance Categories that are
interrelated, and organizations cannot achieve
sustained success without sound systems and
processes in place for all 7(see Fig).
Malcolm Baldrige Framework provides a
systems perspective for managing your
organization and its key processes to
achieve result/performance excellence.
From top to bottom, the framework has
the following basic elements:
1. Organizational Profile Your Organizational Profile (top of
figure) sets the context for the way
your organization operates.
2. System Operations The system operations are comprised of
the six Baldrige Categories in the
center of the figure that define your
operations and the results you can
achieve. Leadership (Category 1),
Strategic Planning (Category 2), and
Customer and Market Focus (Category 3)
represent the leadership triad. Human
Resource Focus (Category 5), Process
Management (Category 6), and Business
Results (Category 7) represent the
results triad.
3. System Foundation Measurement, Analysis, and Knowledge
Management (Category 4) are critical to the
effective management of organizations and to
a fact-based, knowledge-driven system for
improving performance and competitiveness.
Measurement, analysis, and KM serve as a
foundation for the performance management.
system.
The EFQM Model:
Regardless of sector, size, structure or
maturity, to be successful, organizations
need to establish an appropriate management
system. The EFQM Excellence Model® is a
practical tool to help organizations do this
by measuring where they are on the path to
Excellence; helping them understand the gaps;
and then stimulating solutions.
The model has 9 criteria with a definition.
Each of the 9 criteria is supported by sub criteria which are a series of statements
about each Criterion which should be considered in the course of assessment.
Definition for each nine criteria:
Enablers Include
1. Leadership: How leaders develop and facilitate the achievement of the mission and
vision, develop values required for long term success and implement these via
Appropriate actions and behaviors, and are personally involved in ensuring that the
Organization’s management system is developed and implemented.
2. Policy and strategy: How the organization implements its mission and vision via a
Clear stakeholder focused strategy, supported by relevant policies, plans and
objectives.
3. People: How the organization manages, develops and releases the knowledge and full
potential of its people at an individual, team based and organization wide level, and
plans these activities in order to support its policy and strategy and the effective
operation of its processes.
4. Partnership and resources: How the organization plans and manages its external
partnerships and internal resources in order to support its policy and strategy and the
effective operation of its processes.
5. Processes: How the organization designs, manages and plans its processes in order to
support its policy and strategy and fully satisfy, and generate increasing value for,
its customers and other stakeholders.
Results Include
6. Customer results: What the organization is achieving in relation to its external
customers.
7. People results: What the organization is achieving in relation to its people.
8. Society results: What the organization is achieving in relation to local, national
and international society.
9. Key performance results: What the organization is achieving in relation to its
planned performance.
Conclusion:
Considering several BE Models and Frameworks reveals that the comprehensive
excellence model must have expansion coverage as:
1. The model should cover the generality of all Business Activity in the organization
2. The model should cover the approach and functions of all Business
processes in the organization
3. The model should be user friendly in spite of being rich of managerial concepts
Tata Business Excellence Model (TBEM)
is based on the Malcolm Baldridge
Model adapted for Health Care
Services. The TBEM offers an
integrated, planned approach to
quality implementation. The approach
to provide curative and cost
effective health care in a customer
friendly manner was through the seven
criteria of the Balderige model.
Mexican Business Excellence Model is
a TQM model which is constructed in
eight categories includes Customers,
Leadership, Planning, Information and
Knowledge, Personnel, Process
Planning and Management, Social
Responsibility and Organizational
Results. It is also a guide that
helps companies to understand and
assess their operation by the use of
a tool that evaluates the maturity of
company’s systems and processes, as
well as their degree of
implementation and the value created
for stakeholders.
4. The model should be DYANAMIC so that it could be able to involve new components and criteria in the future
5. The model should have the ability to be implemented through the
software
6. The model should be flexible and be adaptive to the upcoming change surges
7. The model should be scientific and applicable in several situations.
Comparison Table
Mexican
BE Model
Tata BE
Model
EFQM
Model
Malcolm
Baldrige
Australian BE
Framework
Models
Criteria
Leadership
Innovation, Quality &
Improvement
Strategic Planning
Customer & Market Focus
Data, Information
and knowledge
Measurement,
Analysis and KM
Human Resource Focus
Process Management
Business Results
Success and Sustainability
Partnership and
Resources
Key Performance
Indicators
Pand Business Excellence Model
Pand Business Excellence Model (PBEM), is Based on increasing the simplicity
of Business Excellence Models in the process of changing the vision of
leadership. We have integrated the homogeny concepts into unified attributes
to ease the learning of self assessment in managerial teams. Improvement must
be continuous and the leadership should be able to de-learn the past
experiences belong to last millennium and try hard to relearn the complexity
of leadership in twenty first century as simple as possible. This attempt
consists of seven categories in strategic context of the organization lead
through Knowledge Management and Learning.
Basic Concepts:
The impact of technological development on day to day Human’s life enforces
the initiators of Visionary Leadership to accept the change toward more
mature concept but simple models.
Since literature of management context emerged and transformed during the
past years, to provide extensive explanation of leadership, the authors’
team, duly decided to integrate the homogenous concepts but expand the content
of each attribute, in order to facilitate and often applicable the process of
Self-Assessment for knowledgeable managers.
Third millennium started with continuous learning, let say, every 5-7 years
turns a new generation in social science happened, while this gap was 25-30
years in the past century.
Visionary Leadership induces Organizational Collaborative Strategy and paves
the way for participative planning.
Upon feeling their important positions, all members of organizational
resources share their mind in strategic planning. They put their utmost
capabilities to enrich the Value Chain related with Customer Focus putting
through the new trend to Business Process, resulting ever incremental profit
for stakeholders and sustain the competitive advantage in the market.
Implantation of such criteria will conduct the leaders to Key Performance
Indicators comparing the status quo with the previous conditions and industry
trend.
Pand Business Excellence Model
Model Description:
Strategy
As per H. Mintsberg; the most common use of strategy is categorized as
follows:
1. Strategy is a plan, a “how”, a means of getting from here to there.
2. Strategy is a Pattern in actions over time; for example, a company that
regularly markets very expensive products is using a “high end”
strategy.
3. Strategy is Position; that is, it reflects decisions to offer
particular products or services in particular markets.
4. Strategy is Perspective, that is, vision and direction.
Strategy is a long term plan of action designed to achieve a particular goal,
as differentiated from tactics or immediate actions when resources at hand.
Strategy is an Integrated and coordinated set of commitments and actions
designed to exploit core competencies and gain a competitive advantage.
Strategic context
Strategic context of an enterprise comprises of conditions and facts that are
difficult or impossible for a company to change. The context includes both
the culture of the company itself and the environmental realities in which
the company operates. Changes in strategic context will often precipitate a
change in business strategy; in addition, a specific context will limit what
is possible in the nature and degree of strategic change.
The environmental reality within which the business strategy is executed
includes the economic, regulatory, technological, and infrastructural
limitations or the countries and location in which the business operates. It
also includes the cultural and societal norms of the people who live there,
the needs of the market that the business might serve, and the appetite and
capabilities of the company with which the business collaborate or compete.
Visionary Leadership
Visionary leadership or charismatic leadership is the kind of leadership that
critically examine the status quo with a view to developing and articulating
future strategic vision or goals for the organization, and then leading
organizational members to achieve these goals through empowering strategies.
This type of leadership has five dimensions, to articulate a strategic
vision, to be sensitive to the environment; to be sensitive to member needs,
to engage in personal risk in carrying out their vision, and to be perceived
as unconventional in behavior, respectively.
Value Chain
Value chain is a template that firms use to understand their cost position
and to identify the multiple means that might be used to facilitate
implementation of a chosen business level strategy. A firm value chain is
segmented into primary and supportive activities which directly or in
directly influence in creation, sales and distribution of product/service to
the customers.
Business Process
A business process is a collection of related structural activities that
produce something of value to the organization, its stake holders or its
customers. It is, for example, the process through which an organization
realizes its services to its customers. The linkage of business process with
value generation leads some practitioners to view business processes as the
workflows which realize an organization's use cases.
Tangible Consequences
Stakeholders
People, group, any type of organization, governmental or private, for profit
or non profit, individual or community who are (or might be) affected by any
action taken by an organization or group, or who will be affected by an
endeavor and can influence it but who are not directly involved with doing
the work or with an interest in the success of a group or an organization in
delivering intended results and maintaining the viability of the group or
organization's product and/or service or has a stake in or may be impacted by
a given approach to environmental regulation, pollution prevention, energy
conservation, etc. or mobilization effort, representing a particular segment
of society.
Intangible Consequences include
1. Sustainable Success (Sustainable Competitive Advantage): To consistently make profits in excess of its cost of capital - economic
rent - the company must possess some form of sustainable competitive
advantage (SCA). A firm possesses a SCA when it has value creating
processes and positions that cannot be duplicated or imitated by other
firms that lead to the production of above normal rents.
2. Competitive Advantage (CA): A SCA is different from a competitive advantage (CA). A CA is a position a
firm attains that lead to above normal rents or a superior financial
performance. The processes and positions that engender such a position (CA)
is not necessarily non-duplicable or inimitable. It is possible for some
companies to, temporarily, make profits above the cost of capital without
sustainable competitive advantage. A key difference between CA and SCA is
that the processes and positions a firm may hold are non-duplicable and
inimitable when a firm possesses a SCA. Hence a sustainable competitive
advantage is one that can be maintained for a significant amount of time
even in the presence of competition. This brings us to the question what is
a "significant amount of time". A CA becomes s SCA when all duplication and
imitation efforts have ceased and the rival firms have not been able to
create the same value that the said firm is creating.
Key Performance Indicators:
Key Performance Indicators (KPI) are financial and non-financial indexes used
to quantify objectives to reflect the strategic performance of an
organization. A KPI is used in Business Excellence to assess the present
state of business and to prescribe the course of action. The KPI’s differ
depending on the nature of the organization. They help an organization to
measure progress towards their organizational goals.
How to put the Model into practice:
“Bottlenecks are at the top of the Bottles”
-Martin Peters-
To prevent halting the process as Bottleneck, Visionary Leaders are obliged
to transform the resources to engine of Value Creation through participating
Human Resource and even more, Stakeholders, in Strategy preparation and
Planning as well as Building up A Value Chain to produce value for Customers.
Today, Visionary Oriented Organizations are sustaining the result oriented
ones. Therefore, the consequence of Business Process must be invested in the
areas which enable the organization to approach it’s Strategy, Mission and
ultimately it’s Vision. The target will not be possible to achieve unless the
Core Value of the Organization is based on Continuous Learning and defining
the core knowledge produced in the organization.
Strategic Context consists of Environment and all forces existed in, having a
positive, negative or uneven impact on the organization. This is to determine
the element affecting”PBEM” while localizing and customizing this model for
any individual organization.
The Strength of the model:
The holistic approach to achieve excellence is one of the strengths of the
Pand Business Excellence Model (PBEM).The model tries to incorporate all
aspects of the business. For example are all the company’s Stakeholders, not
only shareholders but also customers, employees, partners, suppliers, the
society in which the organization operates, and those with a financial stake
in the organization included in the model.
Strength of the model is the relation to financial results. As mentioned
above, the model indirectly includes shareholders interests, but more
importantly it helps the intuitive understanding of what is needed to improve
the financial result. By directly improving tangible results including
stakeholders’ satisfaction and achieving intangible consequences which
include possessing sustainable success and competitive advantages through the
Value Creation, you at the end improve your financial results.
The whole model has a causal structure, meaning that the causal relationship
between the criterions helps comprehend the model. The causal relationships
seem sound and logical. The causal structure starts with leadership, which is
responsible for the development of the structures and infrastructures
necessary to achieve the desired consequences (people and customer
satisfaction, impact on society and in the end financial results).
This logical causal relationship in the model is in accordance with what has
been preached by TQM supporters, that the foundation for TQM (the TQM
pyramid) in any organization is leadership.
As previously stated there is emphasis on prevention. This is strength
because in the optimal situation, you would actually prevent fires before
they ignite, instead of fighting the fires as they
Appear. If you are able to prevent fires, you as a manager could spend much
more time on the future activities, which according to Jan Leschly are
exactly what leadership in the future should be about.
The last strength that will be mentioned here is the circular structure of
the model. It could be also mentioned as the logic of the Pand Business
Excellence Model.
PBEM Logic
Circular causal relationship model
Circular structure
The circular structure of the excellence model shows, that you should
continuously improve the organization. You should use the consequences to
innovate and learn, which help to strengthen the
Value creation activities and lead to improved results. Since it is a cycle
you keep improving, you do not stop after one period and it would be
gradually continued.
Organizational Philosophy New technology has found new era to be cultivated. Entering to third
millennium engaged people to learn more about bran wares than hard ware and
soft ware dignity of human, as the best created organ of creature, have
obliged to think the change in human as tools of production to essential
motive of being.
While technology is enhancing we have to think on growth oh human and what so
ever related to. A firm can be called an organization if and only if it
proves to be alive like an organ, change its dynamics Essen continuously and
every fraction of time it improves. Thus it needs to be man kind and make
"Difference". In this model we thoroughly focused on honoring the human on
each 7 criteria.
While talking on "Value Creation" criteria we have to plan and strategy
collaborate in the organization whose people care the whole system and
believes to be living beside/inside.
The live enterprise there must be positive interaction and communication
between personnel and organization. Core competency of such system is
customer focus value chain to produce a kind of business process to conclude
value for state holders and synergy to grown successfully.
Therefore we think Pand Progressive business excellence model with
consideration of human as "Core Value Generator" impact on all aspects of the
model from leaderships. His/Her radiation reflects their willingness to grown
and progress alone and all together, shoulder to shoulder to the management
to utilize the best of other resources.
Through years of experience in production operation management we found an
element which is too obvious to be seen. It is like security, unless and
unsecured event happens, it can not be felt. Human shall be considered as
ruler of tools and other resources, while his/her power comes from his/her
brain, an unlimited source of fortune Presented by creator to the creature.
On the other hand a dynamic system requires the essences to improve which is
tremendously growing.
In order to create value either for personnel and management or for customers
and other resources
Self Assessment
Introducing Self Assessment:
Self Assessment (S.A) is seen as a key driver for improving performance in an
organization and is a key concept of Business Excellence Models particularly,
PBEM. The majority of organizations use Self Assessments as a way of finding
out where they are now, considering where they want to improve, and then
making decisions on how to get there. In the initial stages, self assessment
can be used as a “Health Check”- a starting point for focusing attention and
action.
Self Assessment can be defined as:
“A comprehensive, systematic and regular review of an organizations
activities and results referenced against Excellence Models.”
-EFQM (1999b)-
The primary objective of S.A. is to identify organizations strength and areas
for improvement and to develop action plans to improve organizational
performance.
The inputs and outputs of the S.A. process
An overview of S.A. Methods
There are a number of methods of self-assessment against the excellence model
which can be used. It is recognized that each one can deliver different
benefits and involve different resources and risks. The five key S.A. Methods
are:
• Questionnaire
• Matrix Chart
• Interview and Workshop
• Pro-forma
• Award Simulation
Selecting the S.A. Method
There is seldom a single “Best Choice” of methods for self assessment.
Before a method is chosen it is important to consider what the organization
is hoping to achieve from using the Excellence Model. The choice of method is
therefore dependent upon the availability of resources within the institute,
particularly those relating to commitment, time, energy, information and
finance, culture of the institution, the knowledge and understanding of the
Excellence Model within the institution and the objectives required from the
process. Fig below shows the methods in terms of how much they are based on
Rigor and Evidence.
The Five S.A. options
Irrespective of the model chosen, there are 8 generic steps for carrying out
a self assessment. The steps are illustrated in figure below, and although
they are shown as sequential, some activities may overlap others.
Over time the most appropriate method may change, and it may also be
appropriate to use a combination of methods or more than one method, at once.
Choosing the most appropriate method yielded a much greater buy-in to the
process. It also found that tailoring the content or intensity of the model
to reflect the situation of the area it was to be used in, enabled areas to
achieve a greater understanding of the excellence model than was achieved by
simply adopting a blanket ”one type fits all” approach.
Pand Self Assessment methodology
Using a combination of methods offered flexibility. With this method it is
possible to meet the specific needs of different situations. Pand Self
Assessment Method is a combination of Interview and workshop method with the
questionnaire method. As workshop method involves relatively few people
within an institution. For example, the number of people engaged in one
workshop may have only been 9 or 10, but they may have been considering the
collected evidence from 30 or 40 people which they have collected as part of
the self assessment process. Pand S.A. group used questionnaires to provide
extra data from a much wider base and thereby support their Interview and
workshop method.
Workshop method
The workshops were found to be effective ways of undertaking detailed
discussion and exploration of issues and problems that participants were
aware of. Pand S.A. workshop method part suggests different workshops used
for different categories of stuff. Workshops should delivered in a series
(for example three morning workshops over three weeks) have been helpful in
making the concepts accessible to staff (not too intensive in one time
period).
Pand S.A. workshop method part has tended to be used in two ways:
• WITH reference to Pand excellence model. In the first workshops
participants were introduced to Pand Excellence model, and then at
subsequent workshops we undertook an assessment against the Model, with
a score derived where requested, and improvement plans developed.
• Without reference to Pand excellence model. In these workshops the
focus was on key themes, such as stakeholders, the identification and
delivery of key results, processes and process working, partnerships,
culture change and leadership development issues. In this was, a
general walk around the issues that the model highlights have been
explored and explained without the constraint of the model. In some
cases, the model presented as a summary to bring together the areas.
Questionnaire Method
With this method, data was easy to gathered, and specially when computerized,
easy to collect and analyze. Questionnaire provided quantifiable evidence
from a wide range of inputs. The data gathered using this method identify a
much wider rage of issues than would have been identified by several of the
other methods, and in some instances it provided managers with some feedback
on problems they were not aware of.
While the output from questionnaire was useful for measuring and identifying
changes and improvements, it rarely helped with the identification of
underlying causes. In most cases it helped to yield an understanding of what
staff opinions were in a range of areas, but did not help to explain why, or
suggest any connectivity between the issues. Therefore, Questionnaire found
to be useful and helpful when used alongside another assessment method such
as workshop method.
10 steps of Pand Self Assessment Process
1. Raise middle management awareness A short Introduction to PBEM self assessment to middle managers
2. Choose and train PBEM facilitators Including those from other institutes
3. Internal seminar for all stuff 4. Constitution of Self Assessment Group A cross section of +/-10% of total staff
5. Train the self assessment group
On the PBEM model and S.A. technique
6. Results criteria definition (S.A. Group)
A specific definition could be made of the key performance results.
The “Pand Self Assessment Guideline” serves as a help Reference in this
definition exercise.
7. Assessing the present situation
SA Group will
a) interview appropriate staff, to be able to
b) define strengths & areas of improvement for each sub-criteria
8. Scoring
a) the assessors and the facilitators (review team) score the SA group
assessment report first individually and then find consensus between
them
b) the review team presents score consensus results and discuss it with the SA group
9. Reporting
Facilitators helped by assessors, draft a results’ report for the
management
10. Improvement process
a) Management decision on priority improvement areas
And nomination of I-Teams
b) I-Teams commence on the definition and planning
Of improvement measures, including
Definition of best method for reaching objectives
Time Scales
c) Staff/Management implements improvements
d) And then I-Teams will
Review improvements against agreed targets, and evaluate the results
Incorporating self assessment into Business Planning Process
It was found that the greatest benefits were achieved form self assessment
outputs when they were incorporated into the Business Planning Process.
This required carrying out the self assessment in time for the results to be
available as inputs for the Business Planning Process; the two activities had
to be synchronized, with self assessment becoming an integral part of the
beginning of the planning process. When the S.A. outputs were integrated into
business plans, they tended to become either key strategic objectives in
their own right, or were grouped under a general objective to improve the
management and excellence of the organization.
One of the main ways to ensure that self assessment becomes embedded as part
of a natural improvement cycle is to integrate it as part of the Business
Planning process. Positioning self assessment as part of an integrated
business planning approach is a key benefit of using the Pand excellence
model. This doesn’t mean that all business plans have to be written and
framed around the excellence model, but it does mean that using self
assessment as part of the planning process can lead to a greater clarity of
focus and more resourceful and strategically focused plans.
Conclusion and Recommendation:
Through the after said more than five models and frameworks were selected
among 25 and tried to focus on strong and weak points.
This voyage provides a solid to ground innovate a new model of Business
Excellence, responding to weakness and fill out the gap between fixed and
dynamics models. In our challenge, we have considered total concepts of
quality which covers all role players existing in strategic context and
impacting on the organization.
In order to facilitate the self assessment process, it is vital to define the
procedures, targets and goal to achieve, thoroughly clear for the management,
auditors and Personnel of the organization. Prior to deployment of PBEM to
the entire of the department as well as to localize the model, implementation
the prototype to find and solve the hurdles for enhancing the model to fit
the whole processes of the organizations, is strongly recommended. During the
whole process, management of the knowledge achieved, training and updating
the information attained by staff, shall not be discontinued.
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