Small to Medium Enterprise - Business Excellence Models

WHAT IS A BUSINESS EXCELLENCE MODEL?
Organizations today operate in an environment of increased competitiveness and change. Successful organizations are those that are effective at change, either through creating new markets or meeting new goals for existing products. Yet many companies are ineffective at change and hampered by poor control of their product development operations.

Many companies are unable to accurately estimate, control and improve specific product or contract profit margins, product ship dates, or product quality. Companies know that they need to improve, but with inadequate data they often find themselves unable to prioritize problems, leading to excessive improvement initiatives performed in an unfocused manner.

Companies are left either spending very little money on improvement because they're unsure how to best allocate the money, or are spending a lot of money very ineffectively on numerous improvement efforts going in 20 different directions.

THE MALCOLM BALDRIGE MODEL
This Model is the framework behind the US Malcolm, THE MALCOLM BALDRIGE MODEL, This Model is the framework on which the US Malcolm Baldrige National Quality Award is based, it is an award process administered by the American Society for Quality (ASQ) and managed by the National Institute of Science and Technology (NIST), an agency of the US department of Commerce. This framework is used as the basis for over 40 other national Business Excellence/Quality awards around the world, and has been so successful in facilitating improved performance in the US that NIST has set up a fictitious stock index consisting of award winners to compare to the S&P 500. Visit these websites to find out more: US Government Quality and American Society of Quality

THE EUROPEAN FOUNDATION FOR QUALITY MANAGEMENT (EFQM) EXCELLENCE
MODEL This Model is the framework behind the European Quality Award, an award process run by the European Foundation for Quality Management (EFQM). This framework is used as the basis for the British Quality Award and many other national awards across Europe. Visit the EFQMwebsite to find out more.


THE BENCHMARKING AND PERFORMANCE IMPROVEMENT RESOURCE (BPIR) MODEL
The BPIR model was developed by theBPIR.com team through the adaptation of an existing framework, the American Productivity and Quality Centre's (APQC) Process Classification Framework. The BPIR model provides an alternative, comprehensive, and simple way to classify information within the web-site. The model has been designed to classify information in terms of the typical processes (232 separate processes) that an organisation may use. Differences between the original framework and the BPIR model include the addition of two main categories and an updated/revised list of lower level processes. Download the BPIR model bpirmodel.pdf

THE APQC PROCESS CLASSIFICATION FRAMEWORK
The model based on this framework are referred to as the BPIR model within the website, This Model was developed by the American Productivity and Quality Centre's (APQC) International Benchmarking Clearinghouse in Partnership With Arthur Andersen & Co. The Process Classification Framework was developed in 1992 to serve as a high-level, generic enterprise model that would encourage businesses and other organisations to see their activities from a cross-industry process viewpoint instead of from a narrow functional viewpoint (Process Classification Framework, APQC). This ability to see things from a process viewpoint is a fundamental requirement for successful process benchmarking. Visit the APQC website to find out more: APQC (Use their search facility to find their original model - type "Process Classification Framework").

Business Excellence
A key feature of the BPIR website is the use of business excellence models to categorise and present business improvement information. At present in addition the BPIR's own categorisation system, members have a choice of selecting either the Baldrige Model or the EFQM Excellence Model through which to view the BPIR databases. Future development includes the addition of more models in order to increase the range of choice for members from different parts of the world. The following is a brief discussion of what business excellence models basically are. Included are the key challenges and proven benefits that can stem from their use.

What are business excellence models?
Business excellence models are frameworks that when applied within an organisation, can help to focus thought and action in a more systematic and structured way that should lead to increased performance. All the formal models used within the BPIR are best practice models ie. thorough and consistent use of the model can lead to world class performance levels in the area(s) related to the model.

The models used within the BPIR are holistic in that they focus upon all areas and dimensions of an organisation, and in particular, factors that drive performance. These models are internationally recognised as both providing a framework to assist the adoption of business excellence principles, and an effective way of measuring how thoroughly this adoption has been incorporated.

What is Business Excellence?
Business Excellence, as described by the European Foundation for Quality Management (EFQM), refers to; "Outstanding practices in managing the organisation and achieving results, all based on a set of eight fundamental concepts", these being, "results orientation; customer focus; leadership and constancy of purpose; management by processes and facts; people development and involvement; continuous learning, innovation and improvement; partnership development; and public responsibility" (EFQM, 1999). This definition serves as a typical example of those put forward today.

In general, business excellence models have been developed by national bodies as a basis for award programmes. For most of these bodies, the awards themselves are secondary in importance to the wide-spread take up of the concepts of business excellence, which ultimately lead to improved national economic performance. By far the majority of organisations that use these models do so for self-assessment, by which they can identify improvement opportunities, areas of strength, and use the model as a framework for future organisational development. Users of the EFQM Excellence Model for instance include the criteria for the following range of key business purposes (EFQM, 2001):

When used as a basis for an organisation's improvement culture, the business excellence 'criteria' within the models broadly channel and encourage the use of best practices into areas where their effect will be most beneficial to performance. When used simply for self-assessment the 'criteria' can clearly identify strong and weak areas of management practice so that tools such as benchmarking can be used to identify best-practice to enable the gaps to be closed. These critical links between business excellence models, best practice, and benchmarking are fundamental to the success of the models as tools of continuous improvement.

The most popular and influential model in the western world is the one launched by the US government called the Malcolm Baldrige Award Model (also commonly known as the Baldrige model, the Baldrige criteria, or The Criteria for Performance Excellence). Many national and state/regional awards base their frameworks upon the Baldrige criteria.

Who uses business excellence / models?
Organisations across the world are using these models as a basis for continuous performance improvement. In the US nearly two million copies of the Malcolm Baldrige Model (MBM) have been distributed since the award's launch in 1988, and this does not include copies that are available in books, state and local award programs, or those downloaded from the web (National Institute of Standards and Technology, 2001b).

Bplans.com In New Zealand, the location of COER, sales of the New Zealand Business Excellence Foundation's booklets on the Baldrige Criteria were at their highest total in 2000 (over 7,000 sold) since the Criteria was brought to New Zealand in 1992 (NZBEF, 2000).

According to the EFQM (2001), their Excellence Model is used by over 20,000 organisations across Europe, by 60% of Europe's 25 largest companies, and by 9 of the 13 European companies in the FT's 50 World's Most Respected Companies. It was reported in 1996 that 35% of companies in the United Kingdom were found to be using or intending to use the European Business Excellence Model (EBEM) as a guide to self-assessment (Hyde, 1996).

Today many countries promote awards based on business excellence models. At present the number of these stands at over sixty, with the majority being designed around the MBM (National Institute of Standards and Technology, 2001c). Of course there are no rules on how an organisation may use the models,

some use them continually to self-assess, as the driver of continuous improvement,

some use only the results sections as a basis for designing and managing a performance measurement system,

some use the resulting scores from an assessment against the model to benchmark against other like-minded organisations, allowing an easy method of identifying organisations that can potentially be learned from,

some base the whole culture of the organisation around the concepts.

theBPIR.com - Other links baldrigeplus.com

Small to Medium Enterprise - Best Practice Guide

WHAT IS BEST PRACTICE?
Organizations today operate in an environment of increased competitiveness and change. Successful organizations are those that are effective at change, either through creating new markets or meeting new goals for existing products. Yet many companies are ineffective at change and hampered by poor control of their product development operations.

Many companies are unable to accurately estimate, control and improve specific product or contract profit margins, product ship dates, or product quality. Companies know that they need to improve, but with inadequate data they often find themselves unable to prioritize problems, leading to excessive improvement initiatives performed in an unfocused manner.

Business Plan Pro Companies are left either spending very little money on improvement because they're unsure how to best allocate the money, or are spending a lot of money very ineffectively on numerous improvement efforts going in 20 different directions.

Best practices can be defined as "those practices that have been shown to produce superior results; selected by a systematic process; and judged as exemplary, good, or successfully demonstrated", these practices are then adapted to fit a particular organisation (American Productivity and Quality Centre, 1997). The use of best practices, when incorporated within all areas of an organisation, including its stakeholder relationships, can lead to an organisation attaining world class performance.

While there are an infinite number of potential best practices used by organisations across the world, generally, when people talk about best practice, they refer to the high performing practices that proliferate in organisations recognised as having attained world class performance levels. Often, an organisation may use one or more best practices and become renowned for their performance in these areas, but unless best practices are adopted consistently across all the functions of an organisation, as encouraged by business excellence models, it is likely that world class levels of performance will remain out of reach.

Business Plan Pro 'World class' can be defined as a recognition of organisational performance levels that has been 'rubber stamped' by an impartial assessor authority/body. Today in the west, this term is applied to any organisation that succeeds in winning a national quality award or national business excellence award. To give some idea of the difficulty in achieving these sort of performance levels it is worth mentioning that in New Zealand, (home of the Centre for Organisational Excellence Research (COER,) the developers of the BPIR) only two organisations have been recognised as world class in this way in the nine years that the NZ Baldrige based national award has been in operation, and in the US out of the hundreds of applicants for the Malcolm Baldrige Quality Award up to the year 2000, only 40 have seen ultimate success.

The BPIR team's experience is that whilst there may be at a certain point of time, a world's best practice for a particular process or area, most organisations are just searching for better practices that they can quickly identify and implement. This viewpoint is supported by Camp (in Ashton's book, 1997) who states, "the point of best practices is to discover and close performance gaps, so defining "best" might be as simple and subjective as what an executive instinctively feels is best, knowing the business and its competition. Adopting this process does not necessarily mean aiming for world-class".


Who uses best practices?
Organisations that are serious about improving their performance, financial or otherwise, continually search for better business practices. The fastest and easiest way to improve is to compare and learn from other successful organisations (for example, through using a benchmarking approach). To quote a very frequently used idiom among exponents of the use of best practice, "there's no point in re-inventing the wheel". Most organisations use or have used best practices at some point, consciously or not. Over the years best practices emerge, and are later surpassed and proved inefficient as the world and the way business is done constantly changes, this is why so many high-performing organisations adopt a culture of continuous improvement.


What are the common challenges associated with the best practice approach?
The difficulty of incorporating best practices is succinctly put by Camp (1995), the acknowledged father of benchmarking. Camp recognises that many rationales and approaches other than benchmarking can be used to identify best practices, but that "there will still be the need to innovatively and creatively implement the best practices". There are various difficulties involved in the process of improving by learning from best practice, key among these are:



1) Having sufficient knowledge of your own systems and processes to be able to compare against others
2) Knowing where to find best practices
3) Knowing whether a particular practice is suitable for your situation
4) Adapting the practice to your organisation
5) Finding the time and other resources for the above
6) A key to tackling the difficulties above is to use a proven process for "finding and implementing best practices that lead to superior performance", this is why benchmarking is used as a tool to improve business performance.

How can the BPIR help?
The BPIR addresses these issues in a number of ways. Information relating to tools and techniques that can be used to understand your own processes and also to adapt the processes of others, are available within the BPIR databases.

In answer to the question of organisations not having the resources or knowing where to find, best practices, a huge resource of good or best practices as used by organisations from around the world are also available in the databases in the form of case studies and survey information.

In addition to these, details of thousands of organisations that have been recognised by awards for excellent performance or by researchers as having excellent practices are provided as a starting point in the search for benchmarking partners. Having such a resource on hand helps to reduce the cost/time required when searching for best practices.


What is the track record for users of best practice?
The potential improvements to be gained from adapting and incorporating proven high performance practices in your organisation can be anything from small continuous steps of improvement, to radical breakthroughs that result in significant positive change. Like anything else that reaps rewards however, much work has to be done and done properly to enable these potential gains. Benefits from the use of best practices can be best understood through reading the section on benchmarking.

theBPIR.com - Other links baldrigeplus.com