What is Business Excellence and how do you go about achieving it? Well, no one really knows so we decided to conduct a little informal research within our customer base. We classified the results into the following five categories:
- Metrics Management System
- Quality Management System
- Performance Improvement System
- Customer Experience Improvement System
- Management Improvement System
Metrics Management System
Building an effective and efficient metrics management system is critical to Business Excellence. Without metrics there would be no way to measure performance or continuous improvement. Performance metrics include yield, timeliness, quality, productivity, utilization, etc. In the absence of these basic metrics a business excellence framework would collapse.
So what is an effective metrics management system? At a minimum such a system should record the true value of the metrics we want to record. What do you want to or should you record? Whatever matters to your customers, process, and strategy. For example, an online retail giant keeps a keen eye on: on time delivery for orders placed (by category). Failure to perform on the promise of speed of delivery can be suicidal in any business.
Having too many metrics and measuring whatever can be measured without the intention to really action the metric is another issue you must address. Many organizations fall in this trap. You must periodically review the metrics you have in place. And be prepared to drop non-useful metrics from this list. Countless hours can easily be wasted on recording and reporting on non-value added metrics that are never intended to be actioned.
Once the list of metrics is critically reviewed and agreed upon, it is important to spend resources to consistently measure, and evaluate the metrics. This leads to ultimately being able to action the metrics to be able to influence them in a way that will change the results in a positive manner.
Quality Management System
What is an effective quality management system? First, a system is a set of procedures assembled together in a framework which, if followed, will give repeatable results. Measuring the results of the performance of the organization that is following these procedures, is another key component. Finally, if we consistently evaluate and action the metrics, we will ensure we are continuously improving. If we use such a system to produce quality products and services we call this a quality management system.
When companies are small and less complex it was possible to manage them with a set of principles laid out by the owner (or managers). As an organization grows, this becomes increasingly difficult. The business ultimately requires detailed procedures to accomplish tasks and activities. This acts as our insurance against an increasing cost of quality.
Once your Metrics Management and Quality Management Systems are in place you are all set to work on performance improvement. Performance Improvement is about improving key metrics. The metrics that matter most to the business.
What are the key aspects of a Performance Improvement System? Based on our research and interviews the following are the key themes we noted for best-in-class performance improvement:
- Knowing what to improve –not all metrics may need improvement. And it is easy to think that whatever metric appears to be low should be improved. You must be able to benchmark metrics against your peers in your industry as well as where you expect metrics to be.
- One method does not suit all – Using a popular improvement method such as Six Sigma for all projects may be the worst choice you can make in your quality improvement journey. Carefully consider when to use Kaizen, Root Cause Analysis sessions, Six Sigma, Lean Six Sigma, etc. This can save you a significant amount of time as well as yield much better results.
- Project discipline and rigor – there is no point starting a multitude of projects if you are not going to complete them on time. Doing fewer projects and completing them on time is one of the practices most Business Excellence professionals endorse. From there you can key in on improving the most critical metrics first.
- Embed improvements in Quality Management System – In their zest to celebrate success, many companies forget to amend Quality Management System documentation once a process improvement has been made. What we have learned during our research on this is that if these changes are not updated in the documentation, the same problem will come knocking very soon again.
Customer Experience Improvement
If our metrics management, quality management system, and performance improvement systems are working, then we should be rest assured that customers will be satisfied, right? Wrong! Improving customer experience requires an effort over and above managing metrics, quality system, and performance improvement. Look carefully, all these systems are primarily inward looking systems. There is no assurance that customers will think from our own organization’s perspective. So how does one improve customer experience?
Well, start with the basics. Attend each customer complaint as if your company hangs by it. Treat customers with dignity and affection and they will pay back tenfold in new business in one form or another. Treat customers with indifference and they will vote with their feet…by walking away. Train and empower your frontline to have empathy towards complaining customers. Yes, you will lose some money this way, but rest assured theses happy customers will bring you much more business than what you lost.
We have noticed that most companies today have separated frontline and operations. There is very little communication between these two arms of an organization. As a result, many in operations don’t understand what a customer looks like, how does she behave, how angry does she get, etc. This is an opportunity to conduct training using real customer experiences and share what the customer is going through and expects.
Finally, learn from customer experience stories and update your Quality Management System to reflect the same. Change procedures with speed based on customer responses.
Management Improvement System
Isn’t it enough to work on metrics, quality systems, performance improvement, and customer experience? It sure is, but there is one more. We have seen with company after company that if management does not keep pace with improvement year after year, all other pillars of business excellence are not enough.
Management improvement is about improvement business processes and adopting new and improved management processes. Examples include developing a new leadership development system, perfecting the performance appraisal process, improving the goal setting process, developing a new customer contact management process, etc.
Management assessments using frameworks such as the Malcolm Baldrige criteria could be very useful in understanding what needs improvement. Benchmarking for Best and Next Practices is an essential feature of management improvement. Never resting on our current practices is the key to such improvement.
Consider GE. GE developed Six Sigma from a new quality program to a business methodology. (Yes, we know Motorola developed Six Sigma, but grant it to GE to convert it into such a roaring success).
Again, improving your management systems is of little use if you don’t tie them back to your quality system.
Quality Management System: The Glue that Binds Business Excellence
Once your Metrics Management and Quality Management systems are in place you are all set to work on performance improvement. As you work on performance improvement you can start working on the customer experience. Once you notice an uptick in customer experience start adopting Best and Next practices. While you reach out to all these systems – where do you stand? Firmly on your Quality Management System.