Business Issues  


by Dr KC Chan and Priscilla Tanjung

Many good things cannot last. Anything that is of great value will withstand the test of time. “In Search of Excellence” was written in 1982 by two McKinsey consultants, namely Tom Peters and Robert Waterman. If what they have revealed some 33 years ago is still valid today then this action learning masterpiece is no longer a management fad but has evolved into a management theory or business excellence paradigm. The outcome of the action learning paradigm is the “House of 7S”. See below.

Figure 1 The House of Mc Kinsey 7

The McKinsey’s House of 7S
This 1982 business excellence paradigm uses a common sense approach starting from the bottom of the house which assume that the first step to business excellence is to recruit the right Staff, equip them with the right Skills, manage them in the right Style; The next step is to develop the right Strategy, design and adapt the right organization Structure to support the execution of the strategy, and finally install the right System for effective monitoring and control. With the right Shared Values of the people, the right organizational culture though takes time to be nurtured and ultimately matured to attain supreme execution capability. This is what business excellence is all about, i.e. supreme execution capability.

Figure 2 Example of 5 Stages of Organizational Maturity Development with Prime Programs

Organizational Maturity Model
Every organization passes through 5 stages of development to reach maturity level. Each stage will depends on the leadership of management to drive it using relevant and result-driven programs to inculcate the shared values set by the organization. For example, it took General Electric (GE) 20 years from 1981 to 2001; under the leadership of Jack Welch who became CEO and Chairman in 1981. He managed to nurture GE from level 1 to level 5 of the organizational maturity through prime initiatives to develop every GE employee on a global basis. See Figure 2.

Nothing has changed
33 years later the axioms arising from McKinsey’s salient masterpiece in pursuit of business excellence has not changed. The principles of Business Excellence are:
• A bias for action; strategy is only as good as when it is converted into project for implementation/ action.
• Close to the customer; customer is the one who pays our salary so managing customer expectation is a continuous treatment and not one off.
• Autonomy and entrepreneurship; empowerment and enhanced risk taking attitude can be cultivated.
• Productivity through people; you bet on people, not strategy.
• Hands-on, value-driven; lead by example, “walk the talk”.
• Stick to the knitting; focus on the core competence/business.
• Simple form, lean staff; multi-tasking and continual improvement
• Simultaneous loose-tight properties; optimization of resources, reinforcing of activities for outstanding business performance.

Today’s Business excellence

In a similar vein, the endevour to develop a Holistic Business Excellence Model to suit the needs of different leading nations commenced in the US in 1986 by former US President Ronald Regan. In Singapore, the Business Excellence framework is aligned with excellence frameworks adopted for the US Baldrige Performance Excellence Award, European Foundation for Quality Management Excellence Award, Japan Quality Award and the Australian Business Excellence Awards. See Figure 3

Figure 3 The SQA Business Excellence Framework

There are 7 elements in the SQA framework. Leadership sets the direction for the organization and drives the mindset of excellence. Customers are the most important stakeholder of any organization. Strategy is developed based on internal and external stakeholder requirements which determine the development of People and Process capabilities to achieve desired Results. Knowledge is an important feedback loop for alignment of Learning and Innovation which supports decision-making and drives continual improvements. Organizations that have achieved world-class business excellence performance must attain a minimum of over 750 out of 1,000 points. All the other business excellence paradigm also has 1,000 points as the highest score.

Hindsight and Insight
In order to strive and thrive into the future, basing on hindsight and insight, we need to master 3 things. Everything we do we must know what to monitor and control; otherwise, we don’t know what to manage or improve. If we are not confuse, we have not learnt anything; all innovations is the outcome of transforming expensive and complex products or services into simple and affordable ones, i.e. to distill sophisticated ideas into simplicity. If we need to seek the true we need to study the history; 33 years later with the advent of management theories and new models/paradigms only the authentic ones like “In Search of Excellence” will not fade away; we can change the theme to “In Search of Business Excellence” but the primary objective remain a constant, only the secondary objective will change. Like organization values, values remain constant but strategy and the rest (mission, vision) can change.

Professor KC Chan is a practice professor and strategic project management and international business consultant

Priscilla Tanjung is a final year honours degree student at Petra Christian University (Surabaya, Indonesia) specialising in International Business Management