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.

References:

International Management: Culture, Strategy, and Behavior by Richard

M.Hodgets, Fred Luthans: 4th Edition.

Organizational Theory: Text and Cases by Gareth R.jones-3rd Edition.

Making I/T Work: An Executive’s Guide to Implementing Information

Technology Systems by Dennis G. Severance, Jacque Passino

Operations Management by William J. Stevenson: 7th Edition.

Blue Ocean Strategy: How to create uncontested market space and make

the competition irrelevant by W. Chan Kim, Renee Mauborgne.

Competitive Advantage: Creating and Sustaining Superior Performance:

With a new introduction by Michael E. Porter.

The Dance of Change: Challenges to Momentum in Learning Organization by

Peter Senge, Art Kleiner, Charlotte Roberts, Richard Ross, George Roth,

Brayan Smith.

Strategy Maps: Converting Intangible Assets to Tangible Outcomes,

Robert Kaplan and David Norton, Harvard Business School Press, 2004.

And Several Internet Resources.