Why Do Many Business Excellence Programs Fail? (Hint: Lack of Strategy)
Posted: 03/26/2012 12:00:00 AM EDT | 2
Business performance excellence programs, like Total Quality Management and Six Sigma, have been used by manufacturing firms for decades. But as companies contend with increasing competition and cost pressures arising from a globalized economy, these programs have expanded into many other industries. However, a significant percentage of programs fail, says Melissa Connolly. And lack of strategy is often to blame.
Many think of Toyota as the founder of performance excellence. However, the birth of performance excellence actually dates back to the twelfth century B.C. During the Zhou Dynasty, the Chinese government organized and established centralized programs to ensure quality production of various products.
By 1798 the concept of interchangeable parts in manufacturing, and the need to have quality assurance regulate such practices, materialized as a key facet of the Industrial Revolution. The 1900s brought numerous performance based methodologies to include scientific management; quality assurance; and statistical quality control (SQC). Following World War II, prominent US consultants in these methodologies were sent to Japan to expedite rebuilding efforts. By the early 1970s the quality of Japanese products had surpassed that of Western products (Evans, 2008).
As a result of increasing competition and cost pressures arising from the new global economy, deployment of performance excellence programs has expanded into various industries. Today, performance excellence encompasses many different disciplines to include: TQM, LSS, and Business Process Management (BPM). While each of these includes different tools, all enable firms to meet the growing pressure to deliver more for less. Business performance excellence enables firms to do this by providing a mechanism to identify and eliminate corporate waste; enhance customer experience; and systematically increase profits. Thus, performance excellence has become a key indicator of a firm’s ability to achieve sustained profitability and competitiveness. However, while the prevalence of such programs is increasing in today’s market place over two thirds of such programs fail to succeed (Cross & Weiss, 2007).
I was recently selected to develop and deploy a performance excellence program for a global Fortune 500 firm and had the privilege of undertaking extensive research to look at why many programs fail to deliver expected results. After extensive industry interviews and analysis, I found that strategy is one of the keys to success.
The Importance of Strategy in Deploying a New Program
The word strategy translates from the Greek language as, “the general’s view.” This translation paints a vivid picture of a general that understands the environment and sets forth a comprehensive plan to ensure a victory. Within the context of an organization, strategy is the plan and the organizations’ goals and objectives represent the victory. Specifically, Carpenter & Sanders define organizational strategy as the coordinated means by which an organization pursues it goals and objectives (Carpenter & Sanders, 2009).
While most academic material on strategy focuses on the business or corporate level, it can also be readily applied at the program level. Building upon the preceding definition, one can easily infer how strategy would a critical role in the deployment of a new program. Successful design and deployment of a new program requires a comprehensive understanding of where the program will be active; how these activities will be completed; what differentiators will be leveraged; and what staging and pacing will be utilized. These program facets represent five key elements of strategy, commonly referred to as the Business Strategy Diamond (Carpenter & Sanders, 2009).
Without a clear understanding of program strategy, a firm is at risk for not having the required infrastructure to support the new program. Additional risk includes the inability to communicate the program’s mission; prioritize program tasks; and marshal resources appropriately.
The Role of Strategy in a Business Performance Excellence Program
To ensure success, the design and deployment of a Business Performance Excellence Program must include a sound strategy (Maszle, 2010). This strategy should address each aspect of the Business Strategy Diamond as previously outlined. Chevron’s Business Performance Excellence Program, for instance, serves as a good illustration of how to leverage this model in program design and deployment. The program, named Execution Excellence, was deployed within the North America business unit and staffed internally by existing Chevron employees. The program’s strategy defines Execution Focus Items (EFIs) as the method to defining where the organization must focus its energy and resources. Furthermore, the program’s mission statement defines LSS and Performance-Based Leadership as the program’s foundational enablers to ensure sustainable performance excellence (Williams, 2010).
While Chevron’s program serves as a good model, every Business Performance Excellence Program should be individualized to meet a firm’s needs. In fact, research cites a root cause of many Performance Excellence program failures is from attempting to copy another firm’s strategy. While lessons can be learned from studying high performance firms like Toyota, a firm must develop design and deploy a program that is fit for the firm’s individual purpose (Spears, 2009). Additional research solidifies this point by indicating that no two successful Business Performance Excellence programs will ever look the same (J. Douglas, personal communication, December 8, 2010).
As a result of increasing competition and cost pressures arising from the new global economy, successful deployment of Business Performance Excellence programs is more critical than ever. However, while the prevalence of such programs is increasing, a significant percentage of programs fail to succeed. Conducted research and analysis illustrates strategy as a key element in a successful Business Performance Excellence Program.
By employing the Business Strategy Diamond a firm can form a solid plan for achieving program goals and objectives. Furthermore, strategy provides a methodology for defining the program’s infrastructure requirements; communicating the program’s mission; prioritizing the program’s tasks; and marshaling the program’s resources. Additionally, a firm can gain useful insight on program design to include successful strategies by benchmarking other high performing firms. However, it is critical that a firm design a program that is fit for its firm’s corporate strategy and needs.
Bright Hub Inc. (2010). What is lean six sigma? Retrieved from http://www.brighthub.com/office/project-management/articles/36245.aspx.
Carpenter, M. A. & Sanders, Wm. G. (2009). Strategic management: A dynamic perspective concepts and cases. Upper Saddle River, NJ: Pearson Prentice Hall.
Cross, S. P. and Weiss, L.M. (2007). The role of new networks in organizational change. Retrieved from http:// http://www.mckinseyquarterly.com/home.aspx.
Douglas, J. (2010). Driving business process management and optimization across your end-to-end business to drive value, agility and cost effectiveness. Poster session presented at the iSixSigma Energy Forum, Houston, TX.
Eckes, G. (2001). The six sigma revolution: How General Electric and others turned process into profits. New York, NY: John Wiley & Sons.
Evan, J. R. & Lindsay, M. W. (2008). Managing for quality and performance excellence. Mason, Ohio: South-Western Cengage Learning.
Maszle, G. (2010). Taking the next step in your process excellence journey. Poster session presented at the iSixSigma Energy Forum, Houston, TX.
Spear, S. J. (2009). The high-velocity edge: How market leaders leverage operational excellence to beat the competition. New York, NY: McGraw-Hill.
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Williams, W. (2010). Enabling execution excellence through lean six sigma and line management collaboration. Poster session presented at the iSixSigma Energy Forum, Houston, TX.
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This short article by Melissa was very apt and also reflects my experience in leading process excellence journeys many times over. M&BQA is another excellent model for business excellence and so also EFQM. TPS of course still leads the pack and many industries have benefitted from SS/LSS practices. That is precisely as no one likes waste in this "more for less times"
However 75% such initiatives failing(as indicated above) is really a cause of concern and must be addressed by management and also by process excellence folks. What a waste of resources! My experience shows that six sigma has still not made a mark in IT services. Businesses have not realized the benefits as yet though it is a very good PI strategy and culture. Strategy is the main reason of failure as stated as we all want quick wins or posters on walls & that is the enemy for any excellence journey
Suggest more discussions on this topic is generated from both implementers as well as sr business folks
From my perspective, other top 2-3 reasons why they fail are:
1. Lack of employee engagement
2. Not internalised(ie consultant dependent)
Can anyone share the analysis done intelligently by experts recently on failed process excellence initiatives based on clean data? If yes, please share source. I am sure this will be an eye opener for many of us