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October 24, 2013

Thoughts on world class excellence – Unique Voice

Following my earlier discussion on the thoughts of World class excellence covering operational excellence, strategic fit and capability to adapt, here I would like to discuss another defining characteristics of world class excellence that is the unique or even idiosyncratic nature of business. The Unique Organizational Voice (or Unique Voice in short) is thus defined by as organization’s unique practices that result in market success. The idiosyncrasy is a trait that has been acknowledged in much of the capability literature (Gratton and Ghoshal, 2005, Barkema and Shvyrkov, 2007). This dimension of our model is a combined representation of any unique business policy, process or operation that fits particularly well to the organization’s specific circumstance and delivers winning performance in the market place. Our research shows that all world class organizations became so by having something unique, something that they do differently from their competitors and as a result they bring about market success. The literature world is replete with evidence of such uniqueness for world class companies such as Toyota, Zara, Dell, IKEA and so on. Figure 2 illustrates a conceptual model of Unique Voice. From an organization’s internal perspective, it represents the signature policies, processes and operations that characterize the brand or distinctive image of the organization in the eyes of its customers. Externally it represents the differentiated advantage the organization enjoys in the market place as a result.

It should be noted that the concept of signature process is not new (Gratton et al, 2005). The significant difference here is that the Unique Voice has two parts, inside and outside. The inside one refers to the signature practice which includes signature processes, signature strategy, policies and operations and so on. The outside one represents the favourable outcomes in the market place as the result of the signature practices. Our literature review so far reveals that no existing business excellence models or performance measurement system has captured this important dimension.

Unique voice represents the individualist school of business excellence. The paradigm change from a generic approach towards an individualist approach took place from the beginning of the 21st century with a growing body of literature discussing how leading edge organizations created excellence through identifying and developing their own signature practices that outperform their competitors. They often sail into the unchartered water by pursuing differentiated competences and unique voices that result in difficult-to-imitate competences which lead to an enhanced competitive edge, thus supporting the conclusion that true excellence is always unique. This perspective has been echoed by many contemporary management thinkers around the world. Gratton et al (2005) stressed the importance of developing the individualized signature processes not just copying the best practices. McGahan (2004) developed an industry evolutionary model and concluded that business success and excellent performance can only be realized if and only if they fit to their individually specific trajectory of evolution. Kim and Mauborgne (2005) in their international bestselling book “Blue Ocean Strategy” emphasized the critical importance of creating the company’s own individualized “blue ocean” to make the competition irrelevant.

September 27, 2011

Thoughts on World Class Organisation – Operational Excellence

As one of my key research areas, I would like to start a discussion on world class excellence, what it is, and how to achieve it. My thoughts are predominantly constructed around the "World Class Diamond Model" that I created during a major consulting project in 2006. Since then there are many valuable contributions made from my colleagues. In short I believe that all truly world class organisations demonstrate their excellence in four dimensions: operational excellence, strategic fit, capability to adapt, and unique voice. Today I start sharing some of my thoughts on the "operational excellence" and will follow it up with more discussions soon after. Comments, suggestions or questions are always delightfully received.

Operational Excellence

There is a strong body of evidence in the literature to support that world class organizations embrace operational practices that focus on right first time, high efficiency (productive) and effectiveness (customer/market oriented) of processes. These traits are captured in the dimension of Operational Excellence. As operations fulfil the customer requests, they become directly visible to the external environment. Thus in almost all excellence frameworks, measuring operational excellence is included. Because operations execute and deliver the strategic planning, they become the most immediately concerned and measured part of business.

What constitute the detailed measures in the Operational Excellence may vary significantly, and is better to be left open in the model, but for the managers to determine in their specific situations. There are many factors that will determine and change the concept of what is an excellent operation, such as, product categories, market competitive conditions, customer categorizations, and so on. Therefore in the assessment of world class excellence in operations dimension, it is vital that one adopts a situation-sensitive and firm-specific means of evaluation, and the World Class Diamond Model accommodates that.

Operational excellence has been discussed extensively in the classical school of business excellence. The mass-production systems herald by the Taylorism and Fordism in 1920s and 1930s were examples of classical business excellence, in which operational efficiency is the centre piece. Its objectives were to define the “scientific” organization by measuring cost, productivity, throughput time, volume, speed and etc. most of which are still used in today’s measurement system. Such excellence was achieved through specialization and “division of labours” and was driven by Adam Smith’s idea of value-maximization, which pervades economic and management theory. It is very much a “result-driven” excellence, which still has resonance in today’s excellence theories. Amongst the many great thinkers who theorized the concepts of operational excellence, were Adam Smith, Frederick W. Taylor, Henry Ford, Taiichi Ohno and Genichi Taguchi, to name just a few.

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