The hey day of Business Excellence Frameworks seems to have passed but there is somewhat of a resurgence in their interest and application across numerous sectors of Australian organisations. This post is an extract from my 2008 book on “Business Process Management – Insights and Practices for Sustained Transformation”.
Systemic enterprise process improvement
Organisations are introduced to process- thinking through various ways and for different reasons. Process improvement, whether driven from external market forces, regulatory requirements, cost reduction, growth or even business survival, is a common starting point and, sometimes, the only way in which organisations know ‘process’. The ability to measure an organisation’s performance, in terms of its focus on process management and improvement, is becoming more commonplace as it is more widely applied. Business excellence frameworks and BPM maturity models are two significant measures by which organisations can not only determine their maturity on some scale, but also be guided as to the best next steps to be taken and the most useful areas to focus on to increase and sustain their performance.
The concept that the many dimensions of an organisation need to be viewed in relation to each other soon gets quite complex when trying to put the theory into practice. Some tools exist to assist in simulating the effects of making certain interventions, though at the senior management level there exists other frameworks to guide our systems thinking – those of business performance frameworks. There are a number of these that are well-known and practised, and there are even awards given to organisations, which can demonstrate excellence through their application.
These frameworks recognise the systemic nature of businesses and the results that they achieve – they have more than just process as their focus and should be considered by the BPM professional as viable tools for evaluating and managing the process performance of an organisation. Having an appreciation of your organisation as a system is central to process performance measurement, and these frameworks use systems thinking as a way of managing a business and identifying improvement opportunities.
Business Excellence Frameworks and the bottom line
The actual performance of organisations that have applied excellence frameworks and won quality awards have been compared in a number of countries with the performance of standard stock-exchange indicators. A study undertaken by the Securities Industry Research Centre of Asia-Pacific (SIRCA) on Australian Business Excellence Award-winning organisations between 1990 and 2003 showed that they outperformed the Australian All Ordinaries by 3.5 to 1.2(1) Similar studies have been undertaken on the Baldrige Award-winning organisations outperforming the S&P 500 by almost 5 to 1.3(2)
Therefore, it seems that organisations, which apply such excellence frameworks also perform well in other aspects of business performance. It is likely that organisations which undertake such assessments are already exhibiting the sorts of traits that define good business performance by other measures. As the National Institute of Standards and Technology (NIST) states: “While receiving a Baldrige Award or any other award is not a guarantee of success, Baldrige Award-winners typically show improvements in all aspects of managing their organisation, including customer satisfaction and retention, financial and marketplace performance, productivity, product and service quality, and human resource performance and development.”(3)
It is worth noting that there has been much debate about whether award-winning organisations (using any of the frameworks) do actually perform better, and are able to sustain their performance. There is likely to be data that supports both views, and more recent data is scarce.
1. Crissy, W., ‘Baldrige Index Outperforms S&P 500 by Almost 5 to 1’, NIST, 25 February 2000 can be found at: http://www.nist.gov/ public_affairs/releases/g00-26.htm
2. Prajogo, Dr. D., and Sohal, A., The Implementation of ISO 9000 in Australian Organisations: a comparison between
the 1994 and the 2000 versions, Monash University, August 2006, p.12.
3. ‘Quality management standards’, Business Link, can be found at: http://www. businesslink.gov.uk/bdotg/action/detail?type= RESOURCES&itemId=1074432296#
IHC facilitated strategic planning workshops with Ergon Energy (Isolated Systems) using a business excellence framework. A couple of years after being introduced to the framework, Blessing Moyo (Business Improvement Project Manager) spoke at an Ark Group forum on their experience, benefits, and learnings from taking such a systemic and holistic approach to their business planning. He stated that:
Our pivotal turning point into the transformation of our business was the adoption of Australian Business excellence framework and managing the business like a technology start up. Our challenge ahead is to manage fossil fuels versus renewable energy in a regulated business environment.
IHC firmly believe that taking a ‘whole-of-enterprise’ view of business planning and improvement is a pre-requisite for sustained business performance. Business Excellence Frameworks are one way of realising this…