I am currently finishing up a course about Quality, Strategy and Value Creation. The course is taught by Dr. Jeffrey Luftig, an industry expert on quality and business optimization. At one point in his career he spent time working under Dr. Deming while at Ford. From then on, he worked as a consultant, transforming companies from good or not so good to great. Luftig has the unique ability to be able to stand in front of a CEO and tell them that they are an idiot and then get them to spend a lot of money for his services. Ok maybe not as literal as that, but the BPE model is so strong he never had any problem going in front of executives and telling them what they were doing wrong, and helping them achieve business performance excellence through his consulting services.
What is Business Performance Excellence?
“Business Performance Excellence is achieved when an organization is generating the maximum level of profitability possible given the human, financial, capital, and other resources it possesses”. (Luftig, 1998)
BPE is a holistic approach to business. Too often today companies get caught up in whatever the next best thing is. A new quality approach will come out and be adopted by an industry giant and then everyone else follows in suit because its working for the big dog. All of these approaches so far though have been limited in their effectiveness because they don’t view the business as a whole. For instance, six sigma…great program, but its really about process optimization, not so much business optimization. In other words, six sigma can’t help you run your company, it only makes whats there better.
At the backbone of the BPE model is a policy deployment system where constructs are translated down through the organization in an attempt to align everyone. It is through policy deployment that a CEO can say, “Our goal this year is to increase profits 10%” and at the worker level this goal is heard and carried out. This process is also known as Hoshin Planning, and Hoshin Kanri, both processes created by the Japanese. The most important thing about this process is that it is based on data. Data drives the BPE model.
A company that has implemented the BPE becomes able to switch their directions as quickly as a new mission statement can be set and metrics created. In large organizations, this switch can be less than a week in time. Imagine taking a telecom company into the personal cell phone market in less than 7 days. After 7 days, an entire organization will resume moving together to achieve the goals set by upper management. This is an amazing thing.
Further information on BPE can be found at The Center for Business Performance Improvement, Colorado University Boulder.
I hope to make additional posts on more detailed areas of BPE in the future.
