A famous quote by Apple’s Founder Steve Jobs was:
“Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected”.
Business excellence is not a jargon related to a consciously specific industry, sector or county (Porter & Tanner 2004)
In the manufacturing companies, a TQM (Total Quality Management) program plays a key role in reducing costs, continuously improving product quality as well as satisfying all stakeholders’ requirements (Sharma & Kodali 2008), therefore it can serve as a path to achieve business excellence (Afthonidis & Tsiotras 2014). Within the current changes in the business environment, quality became a ‘qualifying order criteria’ for the products while aspects such as ‘responsiveness’, ‘innovation’ and ‘flexibility’ become the ‘winning order criteria’ (Steiber & Alänge 2013).
According to the Kano Model, a classical theory for product development and customer satisfaction, what was considered as a ‘delighter’ quality attribute of the product or the service today will be seen as just a basic requirement in the future. With this situation, therefore, companies should work continuously to improve their products and services (Högström et al. 2010). In today’s environment, the frequency of moving from a ‘delighter’ to a basic requirement is increasing, and more innovative solutions are needed (Dervitsiotis 2014).
The purpose of this article is to underline the core philosophy of the ‘business excellence’ concept combined with an overview of the various approaches that can be used as frameworks for business excellence.
Business Excellence Definition
The original motivation towards improving quality is tracked back to the 1920s when the theory of Statistical Process Control (SPC) emerged (Metaxas & Koulouriotis 2014). With the first Control Chart created by Walter A. Shewhart, companies have utilized control charts to monitor and control their processes in seeking to ensure that their products will meet customers’ expectations (Caulcutt 1996). Additionally, in the 1960s the term ‘total quality’ appeared for the first time, so companies started to implement different quality steps under TQM programs (Metaxas & Koulouriotis 2014). In a relatively stable business environment, the traditional role of TQM programs was enough, but the more the environment becomes turbulent, the more the need to move towards a new type of thinking becomes a crucial factor (Dervitsiotis 2014).
Today, the evolution of the sustainable devolvement concepts and the increased focus on the social, ethical and environmental responsibilities of companies has led to a major shift in business management thinking. The original motivation to improve the quality of the products and/ or services and the processes that provided them was shifted to the quality of the whole society when performing these processes (Hardjono et al. 2001). This shift is usually referred to as ‘Sustainable Business Excellence’ (Dervitsiotis 2003; Metaxas & Koulouriotis 2014).
A summary timeline of the major milestones in business excellence concept development is shown in the below figure.
In order to articulate this mindset change, many parties identified with the ‘Business Excellence’ term and proposed frameworks to achieve it. To start with defining the term, three definitions from three different backgrounds will be used in this research. The first one is from the American Society for Quality (ASQ) which is a global community of professionals in the quality field. The second one is from the European Foundation for Quality Management (EFQM). The final one is from Dahlgaard and Dahlgaard (1999) who are two scholars from Denmark. The three definitions were selected from different backgrounds to understand the differences (if any) between them and to provide a comprehensive understanding of the term. The three definitions are:
- ASQ: “Ongoing efforts to establish an internal framework of standards and processes intended to engage and motivate employees to deliver products and services that fulfil customer requirements within business expectations” [Source: ASQ website]
- EFQM: “[To] achieve and sustain outstanding levels of performance that meet or exceed the expectations of all their stakeholders” [Source: EFQM website]
- Dahlgaard and Dahlgaard: defined the Business Excellence in terms of 4P’s: “excellent people, who establish excellent partnerships (with suppliers, customers and society) in order to achieve excellent processes (key business processes and management processes), to produce excellent products, which are able to delight the customers” (Dahlgaard & Dahlgaard 1999).
Despite the different nature of the three parties who provided the definitions, the three of them shared the below similarities:
- Excellence is an ongoing process; it is not enough to achieve excellent performance but also to sustain it.
- Excellence depends on internal standards and processes. As a business environment changes, these standards and processes should be changed accordingly.
- Achieving excellence needs stakeholders’ management since the success depends on their engagement and on fulfilling their expectations, therefore, there should be a formal process to identify and involve them.
Generally speaking, the fulfilment of business excellence follows PDCA (Plan, Do, Check and Act) Cycle where the company starts by setting its long term strategies, transforming them into actions through a set of processes, conducting self-assessment against a Business Excellence Framework to identify the gaps and finally providing feedback to adjust when needed (Eriksson 2003; Porter & Tanner 2004, p.13; Metaxas & Koulouriotis 2014). The general components of the business excellence are shown in the below figure.
Business Excellence Framework
Companies strive to achieve the business excellence via different frameworks and models. The body of literature is very rich in this area but in an interesting research conducted by Sharma and Kodali (2008) to analyse 36 excellence awards, frameworks and models, they found that companies selected one out of three approaches to surf the excellence journey, namely: “award-based”, “academic/researcher-based” and “consultant based” (Sharma & Kodali 2008). Examples of the three approaches are presented in the below figure.
Although the overall motivation to create any of the three approaches is the same, which is promoting quality-based thinking (Porter & Tanner 2004, p.74), the specific drivers behind each one are different. Award-based approaches were used to recognize the good performer organization, and to provide a self-assessment tool that they can be used to spot the gaps and work on them, while the academic- based approaches were developed by scholars as part of their research to help them in a particular research field. Lastly, consultant- based approaches were developed by the consulting firms using their expertise to help them in their consulting roles (Sharma & Kodali 2008). Accordingly, there is no one size fits all, and pursuing the business excellence journey is different from one company to another (Dawei et al. 2011; Metaxas & Koulouriotis 2014).
As shown above, there are many available business excellence frameworks, however the most famous approaches are the Deming Prize, the Malcolm Baldrige Award and EFQM Award (Stading & Vokurka 2003; Koo et al. 2004; Sharma & Kodali 2008; Dawei et al. 2011; Dahlgaard & Dahlgaard 2013; Ghicajanu et al. 2015).
Below is an overview for each one.
- Deming Prize: Created in 1951 by the Union of Japanese Scientists and Education (JUSE) as the first excellence award in the world, to honour the quality guru W. Edwards Deming. The purpose was to recognize the pioneer companies in the applying of the TQM concepts or what they call Company-Wide Quality Control (CWQC). The award is available to Japanese and non-Japanese companies (Porter & Tanner 2004, p.7).
- Malcolm Baldrige: Created in 1987 as a remedy for a quality crisis in the USA market where the Congress proposed the model in order to promote the quality management thinking, and to reward the good companies in this field. The award was designed for manufacturing companies, service providers and SMEs (Small Medium Enterprises), and later it was expanded to include healthcare and education sectors (Ghicajanu et al. 2015).
- EFQM: EFQM was officially established in 1989 in order to promote the excellence spirit in Europe (Hardjono et al. 2001). The foundation launched the European Quality Award, which is based on the EFQM framework. For the large companies initially and then they expanded the scheme to cover SMEs and the public sector. The first award ceremony was in 1992 (Porter & Tanner 2004, p.70).
As noted before, there is no one size fits all, therefore, different versions of excellence awards have been locally developed from other frameworks such as (For complete lists please refer to Porter & Tanner 2004; Sharma & Kodali 2008; Ghicajanu et al. 2015):
- The Canada Awards for Excellence
- Japan Quality Award
- The Singapore Award
- Swedish Quality Award
- Dutch Quality Award
- Russian National Quality Award
- The Dubai Quality Award Model
- China Quality Award
- German National Quality
- Swiss Quality Award
The advantages of achieving business excellence as well as the criticisms against this concept will be illustrated further in the next article.
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Dahlgaard, J.J. & Dahlgaard, S., 2013. Business excellence models: limitations, reflections and further development. Total Quality Management & Business Excellence, 24(July 2015), pp.519–538.
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Porter, L. & Tanner, S., 2004. Assessing business excellence: a guide to business excellence and self-assessment 2nd ed., Oxford: Elsevier.
Sharma, M. & Kodali, R., 2008. TQM implementation elements for manufacturing excellence. TQM Magazine, 20(6), pp.599–621.
Stading, G. & Vokurka, R., 2003. Building quality strategy content using the process from national and international quality awards. Total Quality Management & Business Excellence, 14(8), pp.931–946.
Steiber, A. & Alänge, S., 2013. Do TQM principles need to change? Learning from a comparison to Google Inc. Total Quality Management, 24(1), pp.48–61.