Principle 2: Focus on Achieving Goals (Item 3)
Clear direction allows organizational alignment and a focus on achievement
of goals.
Alternatively: Mutually agreed plans translate organizational direction
into action.
You should use these 10 Business Excellence Principles to strategically
improve your company.
Strategies to implement the Business Excellence Principles are equally
important to operational strategies. You cannot leave out either side
of this equation and be successful.
If you do not have excellent operations aimed at making money, you
will not be around in the future.
If you do not implement strategies to bring your company in line
with the Principles, you will not be around in the future.
One of the biggest reasons for failure to achieve Business Excellence
is the failure to act on the Principles for Business Excellence. Most
companies are faced with the dilemma of having to run the daily operations
and deal with the unceasing and every changing demands of their customers
and the constant demands of the company.
Even if companies recognize that they exist, these Principles appear
to be off in a different planet and of no real practical urgency. Because
the Principles are less urgent than dealing with the daily operational
demands, companies think that implementing the requirements to grow
expertise in using the Principles can always be put off until later.
However, we now know that companies that get fewer than 300 points
in the Baldrige, European or Australian Business Excellence Frameworks
are going backwards and will not survive!
Regardless of excellent short-term results that might satisfy the share
market, a company that can scrape together only 250 points is very bad
news for shareholders.
That realization makes acting on these Principles just as important
as any operational strategy. We have seen companies where the entire
profit from operations, assembled through painstaking hard work, is
wiped out in a single bad money market transaction. We constantly see
companies fail to achieve their full potential because they have not
worked to align what they do to these Principles. Even worse, we see
companies sliding backwards.
- Conduct a self-assessment against these Principles (eg, using these
100 questions). Feed the findings into your strategic planning process.
- Measure your progress on the Principles overall and for each Principle
for your organization overall and for each major part. Provide help,
not blame.
- Use the guidelines about what to do first.
- Conduct a self-assessment against one of the major Frameworks (Baldrige,
European or Australian). Feed the findings into your strategic planning
process.
In Its Not Luck, Goldratt argues that strategy is the direction
we take to reach our Goal. If we violate any of the `necessary conditions',
we will not reach our goal. So a good strategy must not clash with any
of them. Your first step must be to trim any strategy that clashes with
the Goal of making money or either `necessary condition'. Those are
all poor strategies, by definition.
Good strategies begin by developing a decisive competitive edge. Concentrate
on eliminating negatives for the market (Principle 3 `Customers').
Change your policies to allow increased throughput, reduced inventory
and reduced operating expenses (Principle 4 `To Improve the Outcome,
Improve the System').
Risk assessment can provide a very useful framework for the generation
of practical solutions to organizational issues. Risk assessment should
be an integral part of your planning process by giving a practical scan
of your market place.
There are several old paradigms about risk management. These include:
- You only need to worry about financial risk. Most audit programs
are based on this paradigm. The organization can be completely failing
to meet its objectives, but so long as all the `t's are crossed and
the `i's dotted, the paper audit trail is available, everything is
hunky dory. The business news is dotted with examples of organizations
with financial reports signed off by the auditors and which have then
gone bankrupt or the executives charged with criminal behavior. Or
instances of the entire operating profit painstakingly assembled through
hard work and detailed improvement work is wiped out in a single bad
trade by the financial department.
- Risk aversion – do not take any risks. Total risk aversion
is usually very costly because of the large number of strategies necessary
to contain the risk. It also inhibits innovation and change. The approach
is still common in government where the political process punishes
any `error' and `courageous' means do not do it.
Modern risk management requires you to identify your major risk factors
and put strategies or `controls' in place to reduce them to an acceptable
level. You should continue to assess the risk remaining after
your controls are in place – the residual risk.
You keep adding controls to reduce your risk until it is acceptable
– to you. This gives a process for deciding the difficult issue
of when to stop adding strategies. It provides a useful approach to
reduce the number of strategies. If you think the risk is acceptable
without that strategy, or that the cost of the strategy is more than
the benefit obtained from having it, then don't add it. It's your call.
We will deal more fully with uncertainty in decision making in Principle
5 (`Improved Decisions').
- what your competitors are doing and why
- how and why your customers' expectations are changing
- how changes in you market produce new business opportunities
- how changes in the global marketplace will affect you
- changing in thinking about technology, customer needs and the way
business is done will affect you
- any technological developments and innovations that affect your
products
- new ways of doing business with your customers
- changes that produce new market segments
- changes in regulations and tax
- changing community/societal expectations
- changing needs of government
- your company, its capabilities and competencies
- your people, their capabilities and competencies
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