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2000 and Beyond: A Model for Business Excellence

Terry L. Johnson, Christopher A. Turner, and John F. Proud, CFPIM

EXECUTIVE SUMMARY BUSINESS EXCELLENCE FOUNDATION

How do we move upstream from achieving global best practices in The foundation of the business excellence model provides a funda-
the operations of our business to the bigger picture—excellence in mental view of the critical dimensions within an organization and how
every aspect of our business? A level of excellence that provides the they interrelate. Because there are a multitude of activities going on at
returns on stakeholder equity that exceeds our corporate strategies any given time in
and goals. A level of excellence that delivers the results needed to an organization, we
achieve and maintain a lasting sustainable competitive advantage. have tried to sim-
Creating this level of excellence begins with an understanding of the plify this chaos in a Figure 1.
role that integration plays. way that allows a
Integration is not a new concept. It means to make whole or com- logical explanation
plete by bringing together parts. It is integration that is at the heart of of action and reac- Business Excellence Foundation
achieving this level of excellence we refer to as “business excellence.” tion, cause and ef-
The integration of an organization’s people, processes and technol- fect and decision
ogy is the means by which world-class results can be achieved. Imag- and result. The
People
ine your organization’s behaviors are modeled as best practice three dimensions of
throughout the business community. Imagine your people are pas- people, processes
sionate about their role in the organization and its role in the commu- and technology are
The Sweet
nity. Imagine that they are constantly challenging themselves and liv- the foundation. The Spot
ing in the gap between their current performance and the next level area where these
Technology Processes
of excellence. Imagine the results of achieving outrageous goals. three dimensions
Imagine the potential of an organization whose people, processes and overlap we refer to
technology are fundamentally integrated. Imagine the competitive as the “sweet spot”
advantage your organization could hold if this were you. Imagine (see Figure 1). Ex-
“business excellence.” amining each of
Not every organization will have the capability or desire to begin these dimensions
this journey. Even fewer of those who begin the journey will achieve and what is required to achieve complete integration provides the foun-
business excellence. The organizations that recognize the opportu- dation for understanding business excellence.
nity, understand the benefits and successfully achieve them will be
the survivors. People

INTRODUCTION
Successful organizations have not achieved business excellence by
focusing on technology alone. Nor have they recognized world-class
business results by focusing exclusively on their processes or their
people. Today’s leading organizations realize that they must have an
unfailing focus on the customer. This customer focus must be com-
bined with an integrated approach to the critical business dimensions
of people, processes and technology.
The true integration of these dimensions has enabled many suc-
cessful companies to change the way they do business. The model that
will be presented provides the framework for achieving business ex-
cellence and establishes the context and content for understanding this
fundamental change process.
To achieve business excellence, organizations must change the way
they think about business and specifically their own. In increasingly
complex and highly competitive markets, organizations must be able
to focus on their customer, simplify and align company-wide strate-
gies and processes, energize their workforce and integrate the critical
dimensions of their business.
Achieving business excellence means knowing and serving your
customers better than anyone else does. It is having the ability to thrive
in a constantly changing and unpredictable environment. It provides
organizations with the ability to increase the numerator of all return
formulas at a greater sustained rate than the denominator. It means
exceeding stakeholders’ expectations. Finally, it is being able to fully
personify your values and convictions.
We have found that the most successful change initiatives have begun
with a focus on the organizations’ people and their behaviors. To better
understand the power of the people dimension we must have an under-
standing of the impact that people’s behavior has on an organization’s
performance. In fact, we have observed a correlation between how
people behave and how they are rewarded, motivated, encouraged and
developed. Organizations that design their people dimension to en-
courage behaviors such as creativity, learning, risk taking, empower-
ment and excellence are building the foundation for business-excel-
lence-level results.
Processes
An organization that is pursuing business excellence must have a clear
understanding of its essential business processes and how they interre-
late. These processes must cross functional boundaries, be clearly
mapped and defined with inputs, outputs and measurements and add
value for the customer. Their design must be flexible enough to permit
managing change within the organization and firm enough to provide
sufficient structure. The organization must encourage process thinking
and avoid imposing organizational boundaries upon processes. By re-
moving organizational boundaries, individuals are aligned horizontally
across functions instead of vertically within functions. This breaks down
communication barriers and removes the non-value-added activities
inherent in organizations that operate functionally.
When examining the overlap of the people and process dimensions
we observe an organization that we refer to as “directed empowered.”

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The people are energized and empowered and the processes are de-
fined, understood and managed, but without the support and use of
technology, the organization will fall short of world-class results.
Technology
Technology provides organizations with the information needed to ac-
quire and distribute knowledge, understand the impact of change and
measure and monitor performance. The key to understanding the tech-
nology dimension is not to focus on the different types of technology
but rather the way technology is used and supported in the organiza-
tion. For example, the exclusive focus on technology combined with a
focus on the people aspects leads an organization down the road to
“automated anarchy.” In this scenario, without the business processes
understanding, definition and management, the people’s energy is not
directed toward common business results and one set of numbers can
never exist. By contrast, when we examine the overlap of the processes
and technology dimensions we observe an organization that relies on
inflexible process templates driven by predetermined software. This
often results in “alienation” within the organization because the change
initiative has ignored the people. It is only when we begin to integrate
the people and behaviors with the processes and technology that we
are able to operate in the sweet spot.
WHY BUSINESS EXCELLENCE?
In today’s increasingly competitive markets the ability to achieve and
maintain a lasting sustainable competitive advantage can mean the dif-
ference between success and failure. In fact, what worked in the mar-
ketplace several months ago may not be working today. The dynamics
of today’s markets are changing at an ever-increasing pace. Organiza-
tions today are forced to find new ways to innovate, improve and cre-
ate competitive advantage. No one can afford to sit back and watch
their competitors slash their time-to-market. Organizations that oper-
ate in the sweet spot have the ability to increase their capabilities, im-
prove their business results and enhance their responsiveness to cus-
tomer demands. When an organization is observed operating in the
sweet spot, we find:
• There is a passion for success.
• They are creating value to win.
• They are managing the pace of change. They lead their competitors
in the marketplace.
• They set outrageous goals and achieve them.
• They are living in the gap (between status quo and world-class re-
sults), constantly challenging what is known and what works, push-
ing and stretching to achieve new levels of performance.
• They are about speed. They are about increasing velocity, eliminat-
ing non-value-add and finding smarter, quicker and more effective
ways of doing things.
Most organizations will struggle with achieving business excellence
and operating in the sweet spot without an understanding of what is
needed to succeed. The next section will outline the critical success
factors needed to achieve business excellence.
CRITICAL SUCCESS FACTORS—THE BUSINESS
EXCELLENCE MODEL
An organization that has successfully achieved business excellence can
identify those factors that were critical to its success. They include an
understanding of the three critical dimensions of people, processes and
technology, as mentioned earlier in our discussion of the business ex-
cellence foundation. They also include:
• Customer Focus
• Commitment to Excellence
• Integration
• Results.
1998 International Conference Proceedings
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2000 and Beyond: A Model for Business Excellence
Customer Focus
As referenced in the title of Figure 2, focusing on the customer in
every aspect of the business is a critical success factor in achieving
business excellence. Without an unfailing focus on the customer’s wants,
needs and desires, organizations will lose customers to those competi-
tors who are listening. Focusing on the customer includes processes
designed around customer feedback, customer-driven strategies and
technology developed from customer-driven specifications. Many cus-
tomers today are demanding (not requesting) that their needs be met.
The organizations that listen to their customers and take action based
on their feedback are positioning themselves for dramatically improved
performance.
Figure 2. Customer Success Through Business Excellence
Commitment to Excellence
When an organization begins the journey to change, an underlying criti-
cal success factor is the enterprise-wide level of commitment needed
to see it through. We refer to this as the organization’s commitment to
excellence. Beginning with the executive team, the commitment to
excellence is communicated throughout the organization and can be
observed in people’s words as well as their actions. There is no confu-
sion about what the organization has set out to do or what it will takes
to get there.
Integration
Integration is considered the single most critical factor in achieving
business excellence. When we refer to integration, we are speaking of
an organization’s deliberate ability to bring together its people, pro-
cesses and technology in a way that provides organizational synergy.
Aligning these three dimensions to the organization’s change initiative
is necessary to achieve integration. Integration begins when the people
are energized and engaged in the change initiative and they have clearly
defined processes and properly supported technology. Integration en-
ables excellence in every individual, in every action and in every deci-
sion company-wide.
Results
If we neglect to keep the end in mind, we risk losing our focus on the
results we expect to achieve. The final success factor is a constant focus
on the results. During the journey to business excellence, an organiza-
tion will benchmark its current performance against its toughest com-
petitors and use this as a measure to determine the level of results they
believe are achievable. This key to success allows an organization to
measure and manage its progress along the path and adjust as necessary.
IMPLEMENTATION APPROACH
The business excellence model has a structured approach that supports
implementing change initiatives. This approach addresses each of the
critical business dimensions and provides a repeatable and flexible
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2000 and Beyond: A Model for Business Excellence
method for getting to the sweet spot and achieving business-excellence-
level results. It is designed to be adaptable and its implementation strat-
egy may be modified depending on what business issues are driving
the change within the organization.
The first stage of the business excellence implementation approach
includes two simultaneous activities: creating the awareness and un-
derstanding among the people within the organization and mobilizing
the organization to support the change initiative (see Figure 3). Aware-
ness and understanding are achieved by providing an organization-wide
focus on the change initiative and education about the change through-
out the organization. The mobilization effort brings the people, pro-
cesses and technology to a state of readiness. Organizational readiness
enables the case for change to be developed and communicated. It is at
this point that the decisions regarding how to move forward with the
change initiative can be made.
Figure 3.
Implementation Approach
Awareness &
Create Experts & Investment in Skill Development
Understanding Agents of Change & Behavior Change
Dec ision
Redesign Implementation
Mobilization
0 the American Management Institute and has written and presented
The next stage involves creating the experts and change agents and
redesigning the organization’s behaviors, processes and technology.
During this stage, the experts and change agents become role models
for the rest of the organization and serve as coaches throughout the
effort. The redesign step aligns and integrates the people, processes
and technology to support the change initiative. This often results in
dramatic changes to existing behaviors, processes and technology.
The final stage begins to reshape the entire organization through
investing in skill development and behavior change, executing the
implementation plan and realizing the anticipated results. The invest-
ment in the organization’s people and their behaviors is a critical com-
ponent of this approach. It is often overlooked by many organizations
particularly those allowing technology initiatives to drive change. Dur-
ing this stage, the people become energized around the change initia-
tive, they understand what behaviors are expected and are motivated to
act consistent with those behaviors. Implementation is the execution
of the change plan and realization begins when the performance mea-
sures indicate improvement and the anticipated results are achieved.
Depending on the change initiative, this implementation approach
may be supported with more detailed methodology. The benefit of this
approach is that it provides sufficient structure to guide the effort, in-
corporates all three dimensions and allows enough flexibility to ac-
commodate specific needs within different organizations.
SUMMARY
The journey to business excellence may be a difficult one. To get there
requires an unfailing focus on integration. An organization must begin
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the journey with an understanding of the business issues driving the
change and the behaviors necessary to achieve the change. This is
coupled with integration of the people, processes and technology di-
mensions into a seamless holistic organization.
Many of us are reminded of a message that the late Oliver Wight
used to deliver during his APICS seminars. During the early years of
the computer revolution, Ollie believed that the role of people was
misplaced. He made it his personal mission to put people back where
they belong and give them the understanding they need to use their
new technology. Among his many enduring tenets is, “Computers are
not the key to success, people are.” Ollie’s message is as pertinent
today as it was 25 years ago.
ABOUT THE AUTHORS
Terry L. Johnson is a principal of Oliver Wight. He spent 13 years
with Hewlett-Packard and held various management positions in
R&D, manufacturing and distribution during his career. In 1983, he
was in charge of the division’s first implementation of advanced
manufacturing techniques. This successful implementation proved
to be the springboard for numerous successful implementations
throughout Hewlett-Packard and various other companies. He also
Realization
held the position of senior vice president and chief operating of-
ficer for a $120 million defense contractor. As a consultant and edu-
cator, he brings an executive-level business perspective and focuses
on integrated business process improvement programs and associ-
ated educational plans designed to address specific client needs. He
is a member of the Association for Manufacturing Excellence and
papers, given seminars and taught numerous classes, both nation-
ally and internationally.
Christopher A. Turner is an associate of Oliver Wight Europe
and a member of BPICS. He worked for York International, assist-
ing them to become the tenth Class A company in the UK, before
joining Oliver Wight in 1989. During his eight years at York, he
analyzed and implemented MRP II systems, pioneered the concepts
of supplier scheduling and supplier education and integrated the
concepts of Manufacturing Resource Planning, Just-in-Time and
Total Quality. He is a qualified engineer and has studied with the
Institute of Industrial Managers at Danbury Park Management Cen-
tre. He is a member of the Association for Manufacturing Excel-
lence, the British Deming Association and MENSA. He is a fre-
quent speaker at national conferences on the subject of MRP II, JIT
and TQ.
John F. Proud, CFPIM, is a principal of the Oliver Wight Com-
panies and served as chairman of the 1995 APICS International Con-
ference and Exhibition. He held numerous management positions
in the manufacturing industry with Xerox, Century Data Systems
and Burroughs Corporation before joining Oliver Wight. As a con-
sultant and educator, he has assisted numerous companies in attain-
ing Class A performance. He is the author of the book, Master Sched-
uling: A Practical Guide To Competitive Manufacturing and is
widely published by APICS, Auerbach, and other publishing houses.
He earned his B.S. in mathematics from California State
Polytechnical University and his M.S. from West Coast University,
specializing in management sciences. He served as president of the
Orange County APICS chapter and has presented several papers at
APICS’ International Conferences, as well as the First World Con-
gress held in Vienna, Austria.
APICS—The Educational Society for Resource Management