Patterns of Excellence: The New Principle of Corporate Success

Citation

Narasimhan, K. (2000), "Patterns of Excellence: The New Principle of Corporate Success", Measuring Business Excellence, Vol. 4 No. 4, pp. 40-42. https://doi.org/10.1108/mbe.2000.4.4.40.1

Danny Samson and David Challis both with engineering backgrounds also hold PhDs in management. Between them they have wide consulting experience in various industries and government inquiries in Europe, Asia, USA, and Australia. The experiences range from conducting education programmes for companies wishing to transform themselves using interventions such as strategic repositioning, work and process redesign, leadership and team development, operations improvement, organisational change.

This book is a practical guide to achieving excellence based on a global study of the best performing organisations. They have identified the principles, which are common to these best performing organisations. There seems to be something special about the number 14. Just as Phil Crosby’s (1979) quality‐improvement programme has 14 steps, and Edward W. Deming’s (1986) management philosophy for improving quality has 14 points, Sampson and Challis have identified and illustrated 14 principles. These 14 principles, they point out, are drawn from their experience and observation of “best in class” performers.

This book with 19 chapters is divided into three parts. Part 1 comprises two chapters and deals with patterns of excellence; Part 2 deals with the 14 management principles in 15 chapters; and Part 3 covers implementation of the principles in two chapters. Each part commences with a brief description of what is covered in the part.

The unique character of this book is that, as the authors point out, “it does not focus on any particular type of initiative. Rather, it incorporates various advances in management knowledge and focuses on the deeper issues that need to be put right first, before initiatives are introduced” (p. 4). In the introduction to Chapter 1 entitled “Patterns of excellence – beyond organisational ‘mid‐life crisis”’, the authors point out that they found no company that was doing everything in a “best” manner. In 15 pages, they concisely but clearly illustrate, with the help of models, the difference between the ad hoc and short term approach adopted by unsuccessful companies and the single strategic improvement initiative adopted by successful organisations, which is “project managed” in a synergistic way. They stress that successful organisations know “how to manage” and “what to manage” and that they integrate the two into a set of closed loops revolving around the organisation’s major stakeholders: customers, employees, and investors.

Chapter 2 is a very short chapter in which with the help of a case study (Merc‐Medco, a leading pharmaceutical company) describes the characteristics of a “company new”. According to their definition a company new consistently pursues improvement through a common, enduring approach to management and improvement, and every employee knows exactly what is valued by customers and everybody strives to increase customer value not only to retain existing customers but also to gain new ones.

The authors have identified the following 14 “principles of sound management”: alignment, distributed leadership, integration of effort, out front, up front, resourcing the medium‐term, time based, embracing change, learning focus, discipline, measurement and reporting, customer value, capabilities creation, micro to macro. These 14 principles are described in Part 2. In Chapter 3, the first chapter of this part, they have summarised the 14 principles and a brief description of the principles in a table and given a brief summary of the research undertaken at the Melbourne University, Australia. The study investigated issues relating to the 14 principles of management and business performance, by receiving responses to a seven‐page long questionnaire (with 68 questions). The conclusions drawn are based on responses received from nearly 200 sites out of the 1,000 firms surveyed. They argue that “without principles it is very easy to get lost in a complex labyrinth of changing trends and shifting sands. Without principles, there is no long‐term steering, or if indeed management does have some ‘vision’ it does not have a rudder which provides the mechanisms for getting there” (p. 31).

In the next 14 chapters they provide a description of the principles and the benefits accruing from following each of the principles, with some examples. Most of the chapters have models illustrating the principle’s main elements or differences between the leaders and the others. Examples of companies pursuing the principles are included in vignettes. In addition they have provided a set of questions that can be used for analysing the strength of an organisation in respect of the principle and suggestions for improving and strengthening the organisation’s position.

The principle of alignment, at its highest level, is reflected in the connection between customer requirements, the organisation’s values, and strategic direction. It is also reflected in the extent to which the behaviour of employees at all levels, in the direct and supporting functions of the value chain, are developed, supported, and reinforced by the reward system. An aligned organisation expends less energy on unproductive activities than an unaligned organisation and effectively manages internal conflicts as well as conflicts with its suppliers and customers.

The principle of distributed leadership is the extent to which delegation and control is employed to enable employees to undertake the widespread acceptance of responsibility for achieving company’s objectives. In organisations that are effective at practising distributed leadership employees enjoy the challenge of involvement; they are empowered by knowledge; they have assigned responsibilities with clear objectives and goals; they share the organisation’s values and are valued by the organisation. “In the best of all worlds, the measurement of performance outcomes is controlled by the employees themselves so they can take full ownership of the process and its measures” (p. 49). However, the authors point out, that distributed leadership should not be confused either with empowerment or “team behaviour”.

The principle of integration is really about “having the organisational glue to ensure that work processes link together smoothly and effectively”. When practised well, integration leads to a win‐win situation for all: quality and responsiveness improve. In an ideal organisation practising integration the external customer requirements or “voice of the customer” are assessed and communicated to all the employees within the organisation. The various functions and activities are organised so that the focus is on “horizontal” value‐adding processes, as against “vertical” organisational silos. Leading firms by employing multi‐disciplinary teams have managed to change the mindset from “loyalty to discipline” to “loyalty to project team”.

The fourth principle is the principle of being “up front”, which is defined as being open, and honest in communicating both good and bad news; and operating with integrity in all areas of business. This principle, when practised effectively, leads to higher job satisfaction for all employees and enables creating a virtuous circle of up‐front behaviour leading to superior performance which in turn aids the organisation to be more up front.

The next principle that is shared by leading companies is that of not burying the head in the sand (i.e. not having a short‐term focus) but have a medium‐term focus. They plan ahead and construct a schedule for execution to improve their resources, develop capabilities and drive their competitiveness. They also ensure that performance is reviewed periodically and these reviews form the basis for guiding future actions.

The sixth principle is that of “being time focused”. In organisations pursuing this principle, time is an important and valued resource that needs to be allocated, measured and managed proactively, to gain advantages in the market place by time compression and precision. Some of the elements in which time impinges on organisational effectiveness are speed of responsiveness to customer enquiries and orders, bringing new products on to the market, ability to deliver good and services on time. Some of the ways these are achieved are by adopting concurrent engineering, communicating effectively, using technology and speeding up the decision processes by reducing bureaucracy, etc.

The principle of embracing change is reflected in an organisation’s approach to change management. Leading firms spend 20 per cent of effort on formulating and 80 per cent on the implementation of change and the benefit is accrued from the ability to embrace change more quickly and effectively than competitors. The authors point out that change management, at a personal level, is about changing behaviour and attitudes and that the CEO can have an enormous influence on the character of the organisation. Leading organisations recognise the risk involved in bringing about strategic changes and have found that changes are achieved by working first on the “change embracers” and then working on those who sit on the fence, by appealing to the heart, the mind and the wallet. They also know how to tie their change initiatives to achieving performance targets, which include revenue and cost drivers, customer and employee satisfaction, and asset utilisation.

The ninth principle is that of becoming a “learning‐focused” organisation. Organisations following this principle consider “standing still is going backwards” and learning and knowledge at all levels as a critical investment. However, according to the authors, “the most successful companies start at the top and none of the really successful companies make the mistake of putting a learning initiative in place ‘down there’ only”. They assert that without the learning it is difficult to achieve the other principles such as alignment, distributed leadership, etc.

“Being disciplined” is the tenth principle. This principle is defined as having more form and structure rather than less and having a strong systems perspective with lots of standardisation of products, processes, and services, which are documented. However, “these standardisations and documentation activities are not bureaucratic but support the development of individuals and teams” (p. 134). This reliance on standards relieves frustrations for customers and workers alike and saves time and money. They do note, however, that what is “right” will be different based on the organisation’s strategic focus: process, market, customer, or relationship.

The next principle is about “measurement and reporting”. The authors have not provided a clear definition of this principle. However, the illustration depicting the difference between “company old” and “company new”, points to the key differences in measurement and reporting. Great companies have made the transformation from relying on measures of profit, cost, and productivity only to connecting well business measures with operational measures, stakeholder measures (for example, customer satisfaction), and organisational measures (for example, employee satisfaction). Further, the leading companies ensure that the loop between strategy, actions, and outcomes is closed, to achieve accountability and effect improvement.

Creating “customer value” is the twelfth principle, and is defined as organising primarily around the customer and satisfaction of customer requirements. Leading companies have an intimate knowledge of their “order‐winners”, communicate these criteria to everyone in the organisation, and focus their activities to enhance continuously these order‐winners to gain competitiveness. Authors point out that in leading companies they have visited, such as IKEA and Hewlett Packard, “the service ethic can be felt throughout all activities, departments, and processes. All members of the organisation realise that to work is to contribute to ‘serving the customer or to serve someone else who is serving the customer”’. However, according to the authors, leading companies segment their customers and “generally do not try and be all things to all possible customers in every segment of the market” and some (such as Sony with its Walkman) even lead their customers’ needs by their superior innovative power. The authors have identified 20 common characteristics of excellent “customer‐value focused” organisations, which can be used for benchmarking an organisation.

The thirteenth principle is termed “capabilities”. This term is clearly defined but explained as a complex phenomenon that “involves the interactions of individuals, technologies, processes, systems and structures”. The authors have found within leading firms, capabilities are the link between organizational development activity and the creation of the order‐winners through which improved competitiveness is achieved. The communication necessary for this process aids developing alignment of views and shaping organisational identity and culture.

“Micro to macro” is the fourteenth and the last principle. It relates to the connection of people up and down the organisation, and to the connections between an individual’s operational effectiveness, aggregate operational effectiveness, and business performance outcomes. Effective communication using multiple channels is the prime driver that aids improving this connection.

After having described the 14 principles, the management processes found in leading companies, etc., the authors turn their attention to the implementation of these principles to help link business and organisational systems in Chapters 18 and 19, which form Part 3.

The generic systematic approach briefly described is the six‐step problem solving approach:

1. 1.

   (1) building awareness and executive buy‐in;

2. 2.

   (2) strategic focusing – clarifying business and organisational directions;

3. 3.

   (3) business and organisational performance assessment;

4. 4.

   (4) diagnosis and development of the change case;

5. 5.

   (5) project planning; and

6. 6.

   (6) implementation and review.

The key factor that differentiates an organisation’s competitiveness is its strategic focus and, hence, the authors have described Step 2 in greater detail. With the aid of examples they have described the four key focuses – process, product, relationship, and market – that organisations may prefer. Characteristics of organisations pursuing these four pure strategic preference orientations and the typical key principles that support these orientations are summarised in a table. Two other tables illustrate how strategic preferences impact on the practices that underpin the principles of integration and distributed leadership. Maybe in their next edition they would provide examples of the impact on the practices underpinning another 12 principles not covered in this edition.

In the final chapter, the authors have identified ten key success factors (KSFs), which, they claim, can be considered as a readiness assessment test of an organisation to progress from an ad hoc management to a principles‐based system of management. These are:

1. 1.

   (1) Understanding the changing nature of business strategy: from plan to process.

2. 2.

   (2) Integrated management of business strategy and organisational development systems.

3. 3.

   (3) Know the magnitude of the gap, know how long there is and know the culture.

4. 4.

   (4) Know the limits of restructuring and the business growth breakpoint: is the organisation at risk of becoming anorexic?

5. 5.

   (5) Develop an exceptional sense of reality.

6. 6.

   (6) The ability to avoid fad‐surfing.

7. 7.

   (7) Keep it relevant and keep it simple.

8. 8.

   (8) Getting into specifics: managing the detail, not the concept.

9. 9.

   (9) Leadership of the change process.

10. 10.

    (10) Stakeholder engagement.

The text is well written and easy to read the exhibits used are clear and some are also explained in the text. I found the book both informative and useful. However, it would have been useful had the authors developed a questionnaire, for assessing the readiness using the ten KSFs, similar to the questionnaires for evaluating principles.