Evolving the EFQM Model for Business Excellence
What does a successful business excellence framework look like, and how does that need to be adapted to reflect the changing business environment? In this Process Excellence Network interview, Matt Fisher, Chief Operating Officer at EFQM, describes the organisation's model for business excellence and discusses how instability in the Euro-zone has been impacting excellence models.
PEX Network: Could you tell me a bit more about EFQM's model for business excellence?
Matt Fisher: Yes, the model itself was developed in 1990, based on work that had been done by Deming, the Japanese Quality Award, and the Baldridge Prize. It was actually instigated by the European Commission suggesting to large organisations in Europe that we needed something similar for European organisations to remain competitive in the global market place. So the model was developed then by a group of experts led by large organisations in Europe. And since then it’s been developed and adapted so it’s now a generic model that can be applied to any organisation regardless of size, sector or maturity.
PEX Network: And what actually goes into that business model? What does it look like?
M Fisher: Well the most recognisable part of the model is the nine-box framework. There are five enablers, the things that you do within your organisation, and there are four result areas that you’re looking to achieve. And those result areas focus on the main stakeholders within an organisation.
So you’re looking at your key results - they’re your financials and non-financials, your customer results, your people results, and society results. And then to drive those results within an organisation you need to look at your leadership, how you form your strategy and implement your strategy, how you manage your people, how you manage your partnerships and resources, and how you manage your processes, products and services.
PEX Network: So it’s really a holistic approach, it sounds like.
M Fisher: Yes, it’s a holistic framework that gives you an overview and an in depth insight into an organisation, and I think one of the key differences between some of the other quality models is the focus on strategy development and strategy implementation, and going back to leadership. So it does allow you to look at the entire organisation and see things in the strategic context, and understand it from the strategic perspective.
And it avoids getting lost into the detail. I mean, obviously if you’re looking at a whole organisation and taking a holistic approach you need to understand what’s important, and if you start with the strategies of the organisation and the key challenges that they’re facing, it enables you to focus on the right areas. And if you’re employing the model within your own organisation it allows you to make sure that you’re putting the focus and the attention in the right areas.
PEX Network: So I understand that there have been some general changes made to the model since its inception in the 1990s. Why do you make those changes to the model?
M. Fisher: The model has to keep changing with the business environment, the operating environment of the people who use it. There have been significant changes, I think, to the global environment since 1990, and obviously for the model and even just the language within the model to keep pace it has to be reviewed and updated. So we’re now reviewing and updating it on a three-year cycle to make sure it keeps pace with changes.
PEX Network: So what are some of the general changes that have been made to the model over time? How would, say, the business excellence model look different today than it did 20 years ago?
M. Fisher: Well it’s always had the nine boxes, but the content of the nine boxes and the associated tools that go along with it and support it have changed. So the fundamental concepts were introduced, there are eight fundamental concepts, which are then defining the underlying principles of the excellence model. So there’s a value set, a system of beliefs, and based on that, they provide red threads that run through the entire model, so it’s the basic foundations.
And then there’s the RADAR logic, which is the equivalent of a PDCA cycle. So the radar logic stands for Result - defining what you want to achieve - the Approach that you’re going to take to achieving it, how you Deploy it, how you Assess whether it’s working or not, and how you Refine and improve what you’re doing. So it’s a continuous improvement loop.
You have three different components within the model, which work at different levels of detail and different uses, actually, within the model itself. And in terms of what’s changed, if you take the example, in 1990, when the model first came out, it had one of the result areas called impact on society, and in 1990 that was revolutionary. I think now, everyone understands a bit more about CSR, corporate social responsibility, and that’s one area that’s evolved massively in the last 20 years in terms of thinking.
So now one of the eight fundamental concepts is taking responsibility for a sustainable future. But it’s not just focussing on the results, that’s an output of something that you have to do within the organisation. It starts with leadership and the values that they set and create within the organisation, and how they create a culture, which supports the strong corporate ethics and the focus on sustainability. How you integrate that into your strategy so that CSR isn’t just something that you bolt on, something that’s a nice to do, and when times get tough you stop doing it.
How do you actually put sustainability into the core of what you do as an organisation, how do you make sure that the products and the services you deliver for your customers are sustainable? And in fact how do you make sure your business model itself is sustainable, so the organisation is going to have a successful result not just today, but into the future?
PEX Network: In the Euro zone there has been a lot of financial turmoil of late, does this impact at all on the way that companies approach operational excellence, what are you seeing from your membership?
M. Fisher: One of the things we’re seeing is organisations moving back to a more holistic approach. I think one of the things that we’ve seen previously was organisations were applying their business excellence approach, whether this was the model or anything else, to a specific business unit. And they would apply it in lots of business units or factories or sales companies, and those sales companies would be performing very well against whatever tool they were using.
But it’s like a process, it’s not just the process boxes that you have to look at, it’s the arrows that move between them. And when you assess a value chain as opposed to just a unit, the score, the result, whatever it is that you’re getting is not as good because things drop between the gaps. So you have very, very well defined process boxes, but it’s the arrows that move between the boxes where things fall down.
So what we’re starting to see is organisations developing frameworks for corporate governance. If you use the model at the top level of an organisation, you can form a holistic view of the whole system and look at the end-to-end processes. And beyond the end-to-end processes, it allows you to understand your connectivity with your partners’ suppliers and also out to customers. So you can understand those inter-connectivity’s, you can start risk assessments on, where do we have financial risk? What is massively important at the moment in the current economic climate for people to understand what are those interactions, who is it that we need to influence, where do we need to have those relationships? And how do we manage those relationships, who’s responsible for it?
Applying it at a corporate level where you’re looking for some standardisation of processes. This allows you to work out, where do we need to have a standardised process, how do we feedback from the operating units who have to use these processes? Whether they’re working or not, and making changes to them, and where is it okay to develop their own processes within the framework?
So it can be used as a corporate governance tool, and that’s what we’ve been starting to see over the last four or five years. And it’s partly a reaction to globalisation and partly to the economic downturn.
PEX Network: Does it stem also from an increasing awareness of the fact that as a business you’re reliable, you rely on not just yourself but you’re actually reliant on suppliers, on your customers, on a whole host of factors outside of your control, to some extent?
M. Fisher: Yes, that’s definitely something that’s been driving the changes within the model and changes when thinking within organisations. And it’s how do you manage that complexity? The model provides a framework that helps you to understand where those inter-connections are and where you need to manage them.
PEX Network: Are there certain trends or factors that are affecting business excellence models?
M. Fisher: I think the business excellence environment, like anything in business, can be a victim of fads. People pick up on a flavour of the month and they do it for a while, and sometimes they get results and sometimes they won’t. Quite often it’s driven by one person with a very strong view within the organisation, and when that person leaves, the programme dies. I think that’s a big challenge for business excellence that we have to try and get around.
I think the fact that the excellence model’s been around for 20 years and has some pedigree in there, I think one of the reasons for it is that other tools can fit within it. So you can use the excellence model in combination with Six Sigma or Lean approaches, or ISO standards, or any of the other tools that are being used can fit within the framework. What it allows you to do is use the right tool at the right time in the right place in the organisation, because you’re getting that holistic view. I think that’s a very important factor for the longevity of business excellence programmes, is making sure that you’re focussing on the things that will really have a difference to the organisation.
PEX Network: Interesting. Now you’re going to be attending the upcoming Process Excellence Network’s Benelux Forum in October, what are you looking forward to at the forum?
M. Fisher: I’m looking forward to seeing how other organisations have been coping with the changes that have resulted in the post-economic downturn climate. What is it that people have started to do, looking at the experiences of how this has impacted on their programmes and what they’ve done differently? I think certainly from the organisations that we work with here at the EFQM, the ones that have really had strong programmes that were aligned to their strategy have been able to keep those going, and in some cases these organisations are emerging stronger from the economic downturn.
They’ve been able to focus on the right things, they’ve been able to use down time in their facilities to focus on product development or working on new innovative ideas and bringing those to the fore, that are now giving them a competitive advantage. So I think it gives me the opportunity to speak to a number of different organisations and see what’s going on, what they’ve been able to do and what their concerns for the future are, especially as we have the new version of the model coming up, we’re working on the 2013 version at the moment. So understanding what’s changed within the operating environment is very important for us.
Editor's note: This is a transcript of a Process Perspectives podcast Adapting Business Excellence Models to Global Challenges.