Business Excellence Models:
Limitations, Reflections and Further Development
Jens J. Dahlgaard
Linköping University, Sweden.
jens.jorn.dahlgaard@liu.se
Chi-Kuang Chen
Yuan Ze University, Taiwan.
ieckchen@saturn.yzu.edu.tw
Jiun-Yi Jang
Yuan Ze University, Taiwan
Leonardo A. Banegas
Yuan Ze University, Taiwan
Su Mi Dahlgaard-Park
Department of Service Management
Lund University, Sweden.
sumi.park@msm.lu.se Abstract
The use of Business Excellence Models (BEM) has become popular in the last two
decades and several companies have learned from such models and learned how to
use them. More companies, we guess, have experienced problems when using such
models because of various weaknesses such as too sophisticated assessment criteria,
excessive paperwork, cumbersome procedures, and a lack of focus which have
limited its use in practice. To respond to some of those problems a new overall
Business Excellence Framework (BEF) has been developed which invites for
adaption instead of adoption of existing BEMs. The suggested overall BEF helps to
integrate BEM with management tools/techniques and the organizational
culture/characteristics for guiding an organization towards BE. A document-based
empirical case of a world-class company, Boeing Aerospace Support, is being
investigated to illustrate how the overall BEF may work in practice as a complement
to an existing BEM when companies adapt such models to their specific contexts.
Keywords: Business Excellence Models; Total Quality Management; 4P Excellence
Model, MBNQA; EFQM Excellence Model; Self-assessment; Change Management 1 1. Introduction
In order to respond to the highly competitive external environment enterprises
continuously search for new effective approaches to enhancing their management
capabilities such as Total Quality Management (TQM), Business Excellence Models
(BEM), Business Process Reengineering (BPR), Enterprise Resource Planning (ERP),
Organizational Change Management (OCM) etc. Among these various approaches
TQM and Business Excellence Models have been among the most popular ones in the
past two decades.
The existing BEM have in most cases been developed or been supported by
national bodies as a basis for award programs and for the widespread adaption of the
principles and methods of TQM and Business Excellence. Today, more than 80
national and state/regional awards base their frameworks upon the Malcolm Baldrige
National Quality Award (MBNQA) criteria or the European Foundation for Quality
Management (EFQM)/ European Excellence Award criteria (Mann, 2011), and
around 30,000 European organizations were using the European Excellence Model in
2006 (Heras-Saizarbitoria, 2012).
Some research indicates that organizations implementing TQM/ BEM will obtain
significant benefits including both increased financial profit (Hendricks & Singhal,
1996; Hausner, 1999; Hendricks & Singhal, 2000; Hansson & Eriksson, 2002; Jacob
et al., 2004; Boulter et al., 2013) and non-financial outcomes (GAO, 1991; Powell,
1995; Curkovic et al., 2000; Hoisington & Huang, 2000; Douglas & Judge, 2001.
The most recent research on the financial impacts of implementing TQM and
BEM (Boulter et al., 2013) compared 120 national, regional and European award
winning companies from the period 1990 to 2006 with careful selected comparison
companies from the same industry and country as the award winning company. The
analyzed companies were all publicly traded. Like the study by Hendrics & Singhal,
which compared 600 award winning companies in North America with selected
comparison companies from the same industry, no significant differences in financial
results could be found in the implementation period (5 years before the award).
During the post implementation period (5 years after the award was given) differences
between the two groups of companies became bigger and bigger on several financial
results. Compared to the comparison companies, award winning companies
experienced 1 year after the award a further 8% mean increase in sales revenues,
which increased to 17% 3 years after the award, and 77% 5 years after the award. The
award winning companies showed further 5 years after the award a higher mean
increase of 18% in operating income, 40% in total assets, and a 4.4% further
reduction in cost over sales.
Comparing the award winning companies’ share values with the S&P European
2 index showed that during the post implementation period the increase in the award
winning companies’ share values outperformed this index with an increasing margin,
and for the period 1 year before the award to 5 years after the award the average share
value of the award winning companies had increased 102% more than the S&P index.
The conclusions from this most recent research project on the financial impacts
of implementing TQM and BEM were among others: Investing in Excellence as a core of business strategy pays! Objective evidence for this now exists in both North America and Europe. Excellence strategies contribute to business performance through increased
sales and also through reduced cost and process efficiency.
However, not all findings in the literature are positive. Some research findings
indicate that the use of BEM does not guarantee success (Powell, 1995; Jennings &
Beaver, 1997; Fisher et al., 2001; Stephens et al., 2005), and companies complain that
they encounter difficulties in using such models.
Why are the research findings inconsistent? Why do companies encounter
difficulties when using BEM? Answering these questions is challenging. It is an
intrinsically complicated issue which involves many factors such as the degree of
motivation & commitment, the degree of people involvement, size of the organization,
the industrial sector, the organizational structure & system infrastructure,
organizational culture, and companies’ degree of quality maturity, etc.
The literature on implementation of TQM and BEM programs has identified a
wide range of barriers which also may explain the variation/ inconsistencies. These
barriers are among others: Lack of top management commitment, limited resources,
fear of change, work overload, lack of comprehensive quality improvement education,
lack of staff involvement (Corbett & Angell, 2011). In this relation it has also been
pointed out that one of the invisible barriers is how BEMs are perceived and
understood by the users because people’s perceptions and understanding guide the
behavior in the context of using such models (Dahlgaard-Park, 2008).
To help in understanding and coping with the reported problems of using BEM
this article we will first take a closer look at some of the potential weaknesses/
limitations in section 2 and try to discuss, analyze and respond to some of the most
common potential weaknesses/limitations.
After that a simplified BEM (the “4P” Excellence Model) will be presented in
section 3 which has been developed and re-developed during the last 12 years to
address some of the application problems with existing BEMs. The “4P” Excellence
Model functions in this article both as a “stepping stone” for an overall BEF (Business
Excellence Framework) presented and discussed in section 4, and also as a well tested
example of using a simplified BEM where model criteria and potential areas to
3 address (key performance indicators) have to be adapted to company contexts.
The suggested overall BEF in section 4 has been developed in order to show
light on the critical factors which should be part of or integrated with any BEM. The
suggested overall BEF complements existing BEMs by pointing to the importance of
integrating management tools/techniques and organizational culture elements with
existing BEMs.
A case study will be included in section 5 to show how the suggested overall
BEF may work in a specific context as a complement to an existing BEM (the
MBNQA framework) illustrating how a company has adapted a BEM to its specific
context. The case is about Boeing Aerospace Support which was a recipient of the
2003 MBNQA winner in services. The article will end up in section 6 with a short
conclusion and implication section. 2. Limitations of Business Excellent Models
One research category regarding potential limitations of existing BEMs is related
to the poor performance of past MBNQA winners such as Cadillac, Federal Express,
Wallace and Motorola. Such examples have led some management experts and
professionals to question the value of such awards.
The responding argument is very simple and hence do not need much discussions.
Even if the use of BEMs can produce both financial and non-financial benefits to an
organization it is evident that a National Quality Award can not be a guarantee for
long-term success (ex. Wisner & Eakins, 1994; Powell, 1995; Melnyk & Denzler,
1996; Fisher et al., 2001; Evans, 2012).
Another research category points to the potential weaknesses related to the
operations of self-assessment in relation to award applications (Miller, 1993; McTeer
& Dale, 1994; Wilkes & Dale, 1998; Lee et al., 2006). Weaknesses include too
sophisticated assessment criteria, excessive paperwork, cumbersome procedures, lack
of infrastructure, excessive bureaucracy, time consuming, and a lack of focus (Main,
1991).
Three responding arguments will be discussed in the following in response to
some of the most common reported limitations/ weaknesses related to the operations
of self-assessment. Those 3 arguments or discussion points are based on our literature
review combined with two of the authors’ experiences with assessing quality award
applications as external assessors and jury members of the Danish, the Swedish and
the Taiwanese Quality Awards.
The first argument/discussion point is, what award organizations claim, that the
existing BEMs are essentially non-prescriptive frameworks designed mainly for
assessment of award applications and hence they do not provide specific guidelines
4 for management control purposes including the application of management tools and
techniques. However, a counter argument is that companies need help when using the
same models for management control purposes. Application problems for such
purposes are related to the following two questions:
1. How to do self-assessment for other applications?
2. How to decide on the weights (the importance) of the various BEM criteria?
Companies have to find their own ways to do simple and regular self-assessments
which are not so resource demanding as award application assessments. They also
have to find new ways to involve their employees in the regular assessments. One
such way is a questionnaire approach where employees are invited to assess selected
key performance indicators (= potential areas to address) related to each criterion as
well as their perceived importance (Dahlgaard et al., 2011).
The second argument/discussion point is that the existing BEM are not sufficiently
persuasive to yield “Total Employee Involvement” which we assume to be the most
critical success factor in the pursuit of BE. The structure and language of existing
BEM invite for “expert involvement” in stead, and hence the tradition has become
that their use has become dominated almost exclusively by experts and consultants.
Research in this area however shows that cooperation and teamwork are necessary
ingredients for successful BEM initiatives (Chapman, 2000; Jackson, 2001;
Dahlgaard & Dahlgaard-Park, 2004; Dahlgaard et al., 2011; Dahlgaard-Park, 2012). It
is generally the case that the complexity of most processes places them beyond the
control of any individual and thus the only efficient way to tackle process
improvements is through effective teamwork which relies on the premise that people
are willing and able to support any effort in which they are expected and trusted to
participate (Oakland, 1999; Dahlgaard-Park, 2012). The reported operational
weaknesses however may hinder employees from sufficient involvement in
self-assessment and continuous improvements.
The third argument/discussion point is that despite having a holistic perspective
at its conceptual level the existing models lack guidance for integration at the
operational/process level. This argument is surprising when studying for example the
European Excellence Model (2010) where EFQM claims that:
“The EFQM Excellence Model is a practical, non-prescriptive framework that
enables organizations to: Integrate existing and planned initiatives, removing
duplication and identifying gaps.”
However one possible root cause for lacking integration may be the identified
inconsistencies between intentions and practices within the EFQM Model
(Dahlgaard-Park, 2008):
5 “The inconsistency is observed between leadership intention and the practices
(processes), in particular. The culture aspect in terms of value, vision and mission
building was explicitly focused under Leadership, while this focus was more or less
ignored in Strategy, Partnership & Resources as well as in the Process criterion.
These inconsistencies seem to be a major defect of the model and may have been the
reason for many companies’ problems with implementing the model as an overall
framework for strategic planning and improvement of the business. Also in relation to
an award approach these inconsistencies seem to be a major problem both for
companies applying for the European Quality Award and for the examiners.”
Even if the latest version of the EFQM Excellence Model (2010) has been
improved by focusing more on achieving “a full integration of the Fundamental
Concepts of Excellence and the framework of the model” we still find that the
framework has the above inconsistency related to the values and culture aspects. Here
it is especially critical that Strategy only refers to core competencies and not to core
values and core value deployment. It is not enough for assuring sufficient integration
what we can read under the Leadership criterion 1d, that “Leaders reinforce a culture
of excellence with the organization’s people”. It is a long process from leadership
intentions to leadership practices in the many processes which in some way define a
company.
Another possible root cause for lacking integration is related to the many criteria
and sub-criteria of existing BEM. The EFQM Excellence Model, for example,
consists of 9 criteria and 32 sub-criteria, which break down organizational
management into a too excessive fragmentation that may result in self-assessments
lacking integration and focus.
Excessive fragmentation may be symbolized with the old saying that focusing on
the many trees in a forest may hinder observers to see the whole, meaning it may
hinder assessors and especially the management team to see and understand the whole
management system and to understand the most important relationships between its
components specified in the BEM as criteria and sub-criteria.
In the following section we will present and discuss a simplified excellence
model which was developed to address some of the potential limitations of existing
BEM. 6 3. The “4P” Excellence Model
An important motivation behind the “4P” excellence model (Dahlgaard-Park &
Dahlgaard, 2008, 2010; Dahlgaard et al., 2011) has been to create a model that
provides an integrated approach between various and often conflicting aspects such as
soft (intangible) and hard (tangible) aspects, subjective and objective aspects, rational
and irrational aspects, individual/personal and collective/organizational aspects, as
there is no BEM model which embraces those different aspects of organizational
realities. The ‘4P’ model provides a recommended structure or sustainable strategy for
achieving innovation excellence (Dahlgaard and Dahlgaard-Park (2011). According to
the model building quality or excellence into the following ‘4P’ is a precondition for
‘Organizational Excellence’ (OE): 1. People, 2. Partnership/ Teams, 3. Processes of
work, 4. Products /Services. The “4P” excellence model is shown below in two
different versions (Figures 1a and 1b) which we will refer to in the following. The two
different versions of the same model give the same message with different metaphors. Figure 1a. Building OE through the “4P”
Figure 1a uses a pyramid as the metaphor and the resulting model is close to
Liker’s pyramid model for understanding Toyota’s Production System (Liker, 2004;
Dahlgaard & Dahlgaard-Park, 2006).
Figure 1b shows that the “4P” excellence model is an ‘enabler-result model’ with
five criterions, where the first four criterions are the so-called enablers or the critical
success factors (CTF) for the results – products and services (Dahlgaard et al., 2011).
The four enablers comprise a system of four interrelated components, where the first
three enablers (components) may be called the management system, and the fourth
enabler - the process component - develops, produces and delivers products and
services to the market in accordance with the company’s strategies and plans. We
have in Figure 1b indicated that, when implementing the “4P” excellence model like
7 any other excellence model, there is a need for management tools and techniques
(here exemplified with Lean) as well as the right organizational culture (here
exemplified with customer orientation and innovativeness). Figure 1b. The “4P” Excellence Model
What kind of management tools and techniques are needed depends on the
context which also is the case in relation to organizational culture. So the BEM in
Figure 1b should only be regarded as an example of an excellence model which may
fit to a specific company’s context at a specific time.
Figure 1b was in fact first developed for a Danish manufacturing company’s
context when the aim was to assess the company’s technology center, meaning the
processes of innovation and new product development (Dahlgaard-Park & Dahlgaard,
2008, p.77-94). Parallel with that it was adapted to other organizations such as Post
Denmark (Dahlgaard & Dahlgaard-Park, 2004) and a Danish hospital clinic
(Dahlgaard et al., 2011). The Danish hospital case shows 50 potential key
performance indicators (= potential areas to address) to be considered when hospitals
try to adapt the “4P” excellence model.
Business excellence models should always be flexible so that companies can
adapt such models to new needs and challenges. The flexibility of the “4P”
Excellence Model has been tested several times during the last 12 years when master
students at Linköping University, Sweden, wrote their projects or master thesis in a
8 company setting. Examples showing the model’s flexibility vary from assessment of
the whole company, a department, a key manufacturing process to the implementation
of “5S” in a printing company. In all these applications the challenge for the students
together with the company was to adapt the “4P” model to the actual context so that
relevant results and key performance indicators could be included in the model and
later measured by using traditional measurements combined with employees’
perceived measurement scores collected by using the questionnaire approach referred
to in section 2 (both importance and performance are assessed). An example of such
measurement scores will be presented in the following section. 4. An Overall Business Excellence Framework
As a further response to the limitations of the existing BEMs discussed in section
2 we propose in this section a new overall business excellence framework (BEF). The
proposed BEF (Figure 2) has a three-dimensional design which complements existing
BEM helping to integrate appropriate management tools/techniques and the right
organizational culture/characteristics. Figure 2. An Overall Business Excellence Framework
The applied BEM and Management Tools/Techniques are placed in the left and
the right halves of the inner circle, respectively, indicating on the one hand that they
serve as two independent functions in management control applications, and on the
9 other hand, that the two functions should be integrated as one entity in a circle. The
dotted line in the circle means that the two functions are not only coming together to
become one but also a step further to become interdependent of each other as ‘Yin and
Yang’ in Chinese Taoism. This metaphor indicates also that BEM should be
institutionalized into an organization to provide the overall guidance for pursuing
business excellence (BE), and the management tools/techniques should
complementary support the activities in the ongoing pursuit of BE.
The third dimension placed in the outer circle indicates that in order to be
successful in the journey towards BE a ‘desirable organizational culture’ should be
cultivated. It is important here to emphasize that the ‘desirable organizational culture’
has to be identified and defined not only by the top management team but by all
members in the organization (Dahlgaard & Dahlgaard-Park, 1999, 2004) and should
be communicated, deployed, practiced, checked/measured and reflected like any other
strategic process initiated by top management.
Post Denmark had success in building a total quality culture called TIQ (= Total
Involvement in Quality) focusing on the five TQM principles/characteristics:
Leadership, Customer Focus, Continuous Improvements, Everybody’s Participation,
and Focus on Facts (Dahlgaard & Dahlgaard-Park, 2004). Toyota needed only the
following two principles called the DNA of the Toyota Production System: Respect
for People, and Continuous Improvements (Dahlgaard & Dahlgaard-Park, 2006).
Samsung has built their corporate culture around the core values of people, excellence,
change, integrity and co-prosperity.
These three examples illustrate that building the needed organizational culture
varies from company to company because it is context dependent like the other two
dimensions of the overall BEF.
Each of the three dimensions in the overall BEF will be discussed in more detail
in the following.
Business Excellence Models
As indicated above the use of BEM has two purposes: One is guiding the organization
towards BE, and the other is conducting assessment of the performance. Guiding
towards BE is the primary purpose, and conducting assessment is the secondary
purpose.
The MBNQA, the EFQM Excellence Model and the Deming Prize are the three
most well-known BEMs. Adopters may choose one of them in terms of their
preferences or purpose but other excellence models may also be used such as the “4P”
excellence model. If a company has an ambition to apply for a quality award some
time in the future then it makes sense to use the award model also for management
control purposes eventually in a simplified version. Grundfoss used the EFQM
10 Excellence model in the period 1995-1999 both as a management control model and
an assessment model before they applied for the Danish Quality Award in 1999. The
experiences expressed in their self-assessment document were (not externally
available):
Since 1995 managers and employees have been working in line with the EFQM
Excellence model. The model has provided managers and employees with a common
frame of reference – a common language. It supports the organisation’s learning
processes and readiness to change.
Regarding the use of alternative BEMs, Abdullah et al. (2012) suggested a new
comprehensive ‘value-based total performance excellence model’ containing 11
excellence criterions and 6 values under each criterion. The motive of the suggested
model was that ‘intangible measurements were not directly addressed in other
excellence models’. Campatelli et al. (2011) suggested a simplified approach based on
a simplified version of the EFQM model and Six Sigma for the implementation of
TQM principles in a university administration. Asif et al. (2011) suggested that the
existing BEMs should be revised to more comprehensively address the issue of
sustainability; Mohammad et al. (2011) developed a new BEM to be used as an
overarching framework for managing and/or aligning multiple improvement
initiatives within the organization, and Lu et al. (2011) suggested a simplified
framework in four dimensions which, according to the authors, better than existing
excellence models supports the measurement, management and delivery of
competitive performance at a ‘world-class’ level. Lu et al., as well as many others,
stress the importance of firm-specific and situation-sensitive means of evaluations.
The “4P” excellence model has been accepted as an alternative and attractive
BEM for many SME companies because of the model’s simplicity having only five
criterions (Leadership, People, Partnerships, Processes, and Products/Services) each
of which having a set of potential key performance indicators (KPIs). The 50 potential
KPIs suggested for healthcare applications contain a mixture of performance
indicators related to Core Values, Core Competencies as well as Performance Results
(...

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