Business Excellence: why being good is no longer good enough.
Managers who want to assert their company or their business unit with a quality-focused strategy in the ultra-competitive and complex markets of the 21st century’s digital age can no longer avoid Business Excellence.
What does Business Excellence mean?
Derived “excellence” for extraordinary, excellent quality of things, “Business Excellence” describes an entrepreneurial attitude of striving for top performance. In connection with Business Excellence, often synonyms are used such as;
- “Best Practice”
- “Best in Class”
- “World-class manufacturing”
By integrating various operational and strategic elements, companies can achieve Business Excellence and stand out from the competition in their own industry through exceptional performance.
What is Business Excellence?
Business excellence becomes recognizable as a holistic approach when an organization leaves its competitors behind as market leaders in the long term and successfully defends its market share in a top position. An integral view of the company is crucial:
Excellence in management integrates the strategic “what?” (which products and services) with the operational “how?” (approach to product development, manufacturing and market access). If applied consistently, this leads to sustainable competitive advantages for the company.
Why Business Excellence?
Let’s take the example of a bookstore in a Swiss city center and look back 25 years: At that time, a successful bookseller obtained the majority of its products from a central Swiss warehouse. He was supplied daily; the company obtained special editions and publications through personal publishing contacts and selected libraries. The bookseller cultivated a good image with loyal, local walk-in customers and was involved in the association of shopkeepers in its city center. He rivalled with local competitors for the best customer service – the products and prices were almost indistinguishable.
Today the picture has changed dramatically. The bookseller and its business model are supposedly unchanged. However, the customer requirements and market conditions can hardly still be recognized. Digitization has led to a whole new level of transparency in product availability and international prices; the delivery formats of books have multiplied with e-books, audio books, etc.
New global providers reach local customers around the clock via digital channels. And even if the local retail store continues to be a differentiator, customer expectations for delivery times and service have risen dramatically. Our bookseller today is directly exposed to key questions of Business Excellence: “How do I manage to sustainably generate added value for my customers against Amazon, Orell Füssli and Co. and thus stand out from the competition in the long term?”
The complexity of value chains and sales markets is increasing
Many industrial SMEs were able to achieve comfortable growth 20 years ago with a manageable number of personally known suppliers in their home market. Today they use an international network of specialized suppliers in order to offer a multi-layered product portfolio adapted to different markets globally. In many industries and for many companies, the global market economy of the 21st century is steadily increasing competitive pressure. Companies are required to differentiate themselves from their competitors – for example with innovative market services or sustainable price and cost advantages. At the same time, they are confronted with increased complexity in their own value chain and in their distribution markets and channels.
An integral approach
Business Excellence accepts this complexity and uses its dynamics as new opportunities to continuously develop your own business model. It is not only the technical expertise in individual entrepreneurial core competencies such as development, production and sales that are important. However, it is crucial to combine these disciplines in an integral approach to Business Excellence. The integrated competence profile of the Business Excellence approach includes:
- a holistic and network-oriented understanding of your own value creation,
- cross-sectional competencies such as strategic process management and quality management,
- innovation management,
- new forms of your own organization and cooperation with partners
Continuously optimizing operations and structures
Companies geared towards excellence are strategically geared towards their future: They occupy a leading position in their market and set up their own organization strategically and operationally so that they can react quickly and adequately to future developments. They use innovations proactively for their own business model, continuously optimize and improve processes and structures to consistently align all business activities with their market position and customer needs. They recognize new technological and social developments and megatrends earlier than their competitors and actively shape the markets of the future as market leaders.
Their entrepreneurial success and above-average earnings contributions support the business model and allow ongoing investment in new developments. This continues to support their excellence strategy in the future.
How do I get to Business Excellence?
Business excellence is most promisingly applied as a leadership and management approach across the organization. Individual divisions and departments can also use the tools of Business Excellence, but their effect is often relatively limited. In other words: excellence as an entrepreneurial attitude encompasses every area and supplements the existing organization of technical or divisional specialization with connecting tools, measures and activities.
The implementation of Business Excellence begins with a sound understanding of your own business model, which is broadly anchored in the organization. Ideally, the demand for excellence is already anchored therein as a vision and strategy. From this, a set of strategic directions and operational measures can be derived, which are typically implemented in the following areas:
- innovation management and digital transformation,
- process and quality management,
- organizational design,
- corporate partnerships,
- global value networks,
- human resource management,
- leadership culture.
Starting with a strategic initiative
In business practice, the implementation of Business Excellence often begins with a strategic initiative and first focuses on one topic, for example digitization. Further topics are then iteratively addressed by the new management approach: First-class digital market services, for example, require a best-in-class process organization and – derived from this – new roles and positions in the organization become necessary.
An iterative approach across different company domains towards excellence is therefore quite common. However, executives should bear in mind that Business Excellence requires long-term and sustainable positioning and an entrepreneurial commitment which cannot be achieved with an isolated project or with time-limited measures. When applied consistently, Business Excellence will gradually enter and transform all areas of the company to ultimately develop its full potential.
Business Excellence at the Lucerne University of Applied Sciences
Since 2016, the Lucerne School of Business has been offering executive training in Business Excellence: in addition to the overall entrepreneurial approach to excellence, participants also acquire specific tools and skills for conceptualizing, planning and implementing Business Excellence in their own organization. With basic business education as a given, the participants discover how the approach of excellence is applied in selected management fields, e.g. what excellence means in concrete terms in strategic and operational human resources management.
And not just that. Numerous tangible and successful implementation projects resulted from past years of training – either during the program or immediately afterwards. A large Swiss insurance company, for example, reorganized its own facility management based on solid data analysis in line with the quality goals of its service processes, thus improving the satisfaction of its internal and external customers while increasing the loyalty and job satisfaction of its employees in facility management. Another team of students accompanied the digitization initiative in a human resource management of a medium-sized company and showed with tangible implementation measures which HR processes should be digitized as a priority towards excellence in HR management.
In short: if you, as an executive and manager, want to assert your company or business unit with a quality strategy in the ultra-competitive and complex markets of the digital age in the 21st century, there is no getting around Business Excellence. The time is up for standing out of the crowd, and so may your company achieve excellence!
About the Author
Sebastian Huber is the Co-Head of CAS in International Management at Lucerne University of Applied Sciences and Arts where he holds the additional roles of Subject Specialist in Management and lecturer at the University.
He earned a Masters Degree in International Business and Economics with a China Focus from the University of Hamburg, an MBA in International Business and Economics with a China Focus from Fudan University in Shanghai, and is a Doctoral Candidate at Silpakorn University.