Mark Woeppel on Management and Execution

What is excellence? Dictionary.com provides two:

1. The fact or state of excelling; superiority; eminence: his excellence in mathematics.
2. An excellent quality or feature: Use of herbs is one of the excellences of French cuisine.

These are two very different things. Typically, we think in general terms of business excellence in the terms of superiority, but in practice, it is often translated into the second term, to the features of the business; its products and services, its profitability, its customer relationships, or even its employee relationships. The generally accepted definition of business excellence is the use of quality management principles and tools in business management, It is the systematic improvement of business performance based on the principles of customer focus, stakeholder value, and process management.

Business excellence, as described by the European Foundation for Quality Management (EFQM), refers to “outstanding practices in managing the organization 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”.

In general, business excellence models have been developed by national bodies as a basis for award programs. For most of these bodies, the awards themselves are secondary in importance to the widespread adoption of the concepts of business excellence, which they believe ultimately leads to improved national economic performance. By far the majority of organizations that use these models do so for self-assessment, through which they may identify improvement opportunities, areas of strength, and ideas for developing percieved weaknesses.

“Business Excellence” is traditionally defined by tools, not the outcome of being excellent. This is the wrong approach. It’s like saying, “I’ve purchased a very good set of tools at Home Depot. Now, I’m going to build a fabulous building.” The assumption is that the adoption of tools will yield good economic results for companies and economies. This is not necessarily a valid assumption.

Business excellence is best defined by its outcome, not its process. The Malcolm Baldrige award now weights more the 50% of its award criteria on business results, not product quality. Therefore, business excellence can be better described as excelling in the important dimensions of the business: financial performance, customer relationships, product / service value, and employee relationships, over time.

None is more important than the others, no organization can be thought of as “excellent” without superior performance in all four dimensions. Moreover, when one dimension is sacrificed at the expense of another, overall performance suffers. So, the term, “business excellence” must be defined as excelling in the dimensions of its customers, employees, products/services, and profit / return on shareholder equity, over time. An “excellent” organization remains so as its environmental conditions change.

Who sets the standard for excellence? Excellence is a yardstick, against which, you can measure your organization. But who’s to say that one yardstick is better than another? Against whom or what do you compare your performance? Industry benchmarking can be misleading. You may be an excellent performer in an industry that generally does poorly in one or more of the dimensions. One executive told me, “You may be at the top of the worm pile, but you’re still a worm.” So what is the measure? Other industries? This seems like a better approach, but gathering accurate benchmarking data is a signficant obstacle.

I propose that rather benchmarking performance, excellence is a value. A culture. A tradition. A way of life. There is no single standard of excellence except what you say it is. It must be this way, because the drive for excellence must come from within – not imposed from the outside. At best, only the consequences of mediocrity can be imposed from the outside (as reality constantly reminds us). Excellence is a shared value. The entire organization knows who they are and where they’re going.

For those who would like to see their organizations become excellent, the nature of excellence says something about how to achieve it. Achieving excellence is something to be led from the top, not something organic that bubbles up from the bottom. However, a leader cannot impose excellence; he can only create the conditions under which it can develop.

The leader must create a compelling vision for excellence. The organization must have a clear understanding of why it exists. What is the value it creates in the community? Why do customers value their relationship? Why are people so important? What do we do that others do not? This vision precedes process creation and skill development, because the answers to these questions dictate the nature of the processes and the types of skills required.

In the end, excellence comes from leadership, not competition. Like a winning football team, excellence is displayed in competition. The competition doesn’t create excellence, only the results of leading with excellence as a value.