BUSINESS WISDOM MAKING EXCELLENCE A HABITAchieving excellenceHow to fine-tune your businessso it performs at its bestIn association with
Making excellence a habitLet’s be clear, ok is not ok.Especially not for BSI who helporganizations make excellence a habit.In fact, when it comes to understanding what it takes to achieve and maintain excellence,we’re the experts. We uncover, benchmark and understand what makes organizations excellent,day in, day out. With more than 60,000 certified clients globally and the expertise that comesfrom 110 years of delivering standards, we can help you perform better, reduce risk and achievemore sustainable growth.So if ‘good enough isn’t really good enough’, or your organization is already excellent and youwant to help keep it that way, talk to us on 0845 080 9000 or go to www.bsigroup.com/iod.FOREWORD 3Standards help you stand out from the crowd,says BSI chief executive Howard KerrBOOSTING THE BOTTOM LINE 4Adopting ISO 9001 is a proven way to boostprofits and keep running costs downCASE STUDIES 6Two very different businesses describe thebenefits of embracing BSI principlesWINNING BUSINESS 8How quality standards can help you in toughtimes. Plus, the value of increased co-operationBEST PRACTICE 10Six Sigma promotes business and operationalexcellence. We explain how it worksFREE! BUSINESS REVIEW 12How to get your free business review and £100training voucherGroup Editor Lysanne CurrieWriter Tom NashChief Sub Editor Robert SlyArt Director Chris RoweCommercial Director Sarah ReadyAdvertising Director Jo McGrawClient Sales Manager Fiona O’MahonyHead of Commercial Relations Nicola MorrisProduction Manager Lisa RobertsonChief Operating Officer Andrew Main WilsonEditorial 020 7766 firstname.lastname@example.orgAdvertising 020 7766 email@example.comProduction 020 7766 firstname.lastname@example.orgInstitute of Directors 020 7839 1233www.iod.comHow to securebusiness successIn challenging times ensuring your companyperforms at its very best is key to survivalWhether in manufacturing orin services, in big companies orsmall, all businesses facesimilar challenges, but howthey respond will affectwhether they flourish, surviveor close. At BSI, we’ve spent thepast 100 years helping businesses in their pursuitof excellence. From entrepreneurs to establishedcompanies, achieving true success is abouthow you perform day in day out. This meansan organisation’s competitiveness and abilityto survive is determined not only by themanagement but how the business operates atevery level – from the boardroom to the reception.BSI’s proprietary benchmarking researchclearly shows that firms which adopt andimplement effective management processes andhave a clear customer-centric focus will not onlygain competitive advantage but will be able toexcel and stand out from the crowd.This booklet, the first in a regular series, showshow BSI can help you put the frameworks in placeto ensure your business is fit for the future, aswell as today. Please take advantage of our freebusiness review for IoD members and our trainingvoucher. I look forward to hearing your feedback.Howard Kerr Chief executive, BSI GroupPublished by Director Publications Ltd for the Institute of Directors, 116 Pall Mall, London, SW1Y 5ED. Opinions expressed do notnecessarily reflect IoD policy. The IoD accepts no responsibility for views expressed by contributors.MARCH 2012 DIRECTOR3
Making excellence a habitBoosting the bottom lineWith business profits under pressure, taking the right approach to achievingexcellence can make a huge difference – driving revenue up and costs downTo survive and prosper intoday’s tough economy,organisations have one keyimperative: to prop upprofits. They must relentlesslypursue the twin goals of increasingrevenue and reducing costs.The big question, of course, ishow? One answer is to focus onquality. A quality managementsystem such as ISO 9001 providesa best-practice framework toensure company processes meetcustomers’ requirements.Research has repeatedly shownthat organisations which use ISO9001 deliver improved customersatisfaction and, as a directresult, they have boosted theirbottom line. They also seenon-financial benefits, includinghigher staff engagement.First published in 1979 as aBritish Standard (BS 5750),ISO 9001 is one of the mostsuccessful management tools ofmodern times.REAPINGREWARDSBSI clients thatachieved ISO 9001certification reportmajor benefitsfrom the qualitystandard. Among UKbusinesses…• 75% improved theirlevels of customersatisfactionand loyalty• 77% boosted theiroperationalperformance• 74% acquired newcustomers andretained existingclients• 44% achieved costsavingsSource: BSI ExcelleratorResearch 2011TANGIBLE BENEFITSRecent analysis of publishedacademic research papers byBSI shows that companiesimplementing and certifying toISO 9001 perform significantlybetter than those without it. This issupported by BSI’s own customerresearch (see panel, left).Maureen Sumner Smith,global marketing director atBSI, explains the real gainsfrom ISO 9001 certificationin an economic downturn:“Competition is fierce, sodifferentiating factorsbecome vital. Beingindependently auditedto an internationallyrecognised managementsystem standard is sucha factor – and onethat customers areincreasingly demandingfrom their suppliers.“In tough times,businesses mustcontinue to focuson key actionsthat arepivotal to delivering revenuegrowth, while at the sametime tightly controlling theircosts. They must also makeevery effort to sustain apipeline of new salesopportunities and improvecustomer satisfaction andloyalty. An independentaudit to a managementsystem provides companieswith a way to achievethis, and to demonstratethat they have done soto stakeholders.”One million ISO 9001certificates issued worldwideis impressive, but that stillleaves many businessesfailing to assess how theycould benefit financially. BSIhas the solution. It hasdeveloped an ROI calculatorthat produces a report toshow the difference ISO 9001will make to their bottom line.For more information on thecalculator and on how to apply for ISO9001, visit www.bsigroup.com/iodRAISING THESTANDARDBy Dr Steve Tanner, VP HRperformance management atEtisalat and former executivedirector of the EuropeanCentre for Business ExcellencePast research I haveconducted has convincedme of the benefits of ISO9001 certification. Often theoverriding one is access tomarkets, and this is especiallythe case for SMEs.After 30 years working with quality standards, Ithought I had seen it all. But I have gained a newperspective on ISO 9001 from working for Etisalat,which has operations in 18 countries and is one ofthe largest telecoms companies in the MiddleEast. As a quasi-government organisation, Etisalathas no need of ISO 9001 to trade. It adopted thestandard in many of its operations, including manysimilar in size to an SME, of its own free will. Thebenefits fall into three main categories.First, certification has brought an element ofrecognition and pride, demonstrating that theorganisation is as good as the best in the West.Second, it has ensured consistency of service,which – with more than 60 per cent of theworkforce coming from diverse backgroundsoutside the Middle East – is vital in achievingcustomer excellence. ISO 9001 has also helpedsupport growth, as process systems have beenreplicated in new areas.Third, it has created a passion for continuousimprovement. ISO 9001 has identified manyopportunities to improve performance. It is astandard that has truly stood the test of time.4Director Business wisdomMARCH 2012 DIRECTOR5
Making excellence a habitHow standards helped ourr businesses growQuality management systems allow companies to secure new contracts and prepare for expansion. Two very different firms talk about their experiences…CASE STUDY 1:FIELD INTERNATIONALAdopting a standards-basedquality management systemhelped this aerospace companygrow and improve its processesCASE STUDY 2:DB CONSTRUCTIONStandards have brought lucrativenew contracts and recordgrowth for this family-ownedcivil engineering contractorField International is aworld leader in aircraftmaintenance andproduction tooling, groundsupport equipment, militarycomponents and bespokeprecision engineering.The company’s ambition tobecome a global, single-sourcesupplier to airlines andmaintenance organisations wasthe catalyst for implementing theISO 9001 and AS 9100 standards– in an increasingly complexindustry, where mistakes can haveserious consequences, it knew itwould have to ensure consistentquality and reliability.Field International identifiedthe need to improve its businessmanagement system and turned toBSI due to its proactive approachand has found many benefits intransferring its managementcertifications from another auditingbody. By using the audits toidentify system improvements,rather than merely highlight thecompany’s weaknesses, with thesupport of BSI, Field Internationalhas now a much-improved robustMAKEEXCELLENCE AHABIT BY…• Monitoring whatyou do• Identifying waysyou can improve• Involving your staffin all processesmanagement framework that hasbenefited the business across allareas and laid solid foundationsfor further growth.Activities are monitored andmeasured, deficiencies aredetected, and new processes havebeen implemented, resulting incost savings, reduced waste, andless inappropriate or rejected work.Better communication withcustomers has improved servicedelivery and reduced complaints.The effect on staff has beenequally encouraging, as qualitymanager Adrian Gauden explains:“Introducing a management systemtakes time and effort, but overallthe staff in general realise that thecompany would not run efficientlywithout the structure of ourBusiness Management System andsupport from BSI.”In the tender-driven world ofconstruction projects, DBConstruction showed itscommitment to quality andenvironmental best practiceby registering to ISO 9001Quality Management and ISO14001 EnvironmentalManagement standards.With a diverse range of clientsin both the public and privatesectors, the company recognisedthe need for certification tocompete for future business,particularly for local authorityprojects. Thanks to its dualcertification, DB can nowdemonstrate transparency in itsoperations and accountability forall the work it undertakes.The investment in certificationhas certainly brought newbusiness, with more projects wonat both subcontractor andprincipal contractor level. But ithas brought other tangiblebenefits too, including a reductionMAKEEXCELLENCE AHABIT BY…Driving up quality• Being open andtransparent• Improvingcontinually“Certification has given us aclear competitive advantage”in costs of five to 10 per cent, asustained annual growth target of34 per cent, and a workforce thathas embraced the whole process.The key to success for DB wasto have BSI on board – anassessing body that understoodthe construction industry. BSIundertook an initial gap analysisof what DB did well and whatareas needed attention. It thenhelped the company implementthe management systems in astructured and logical way,communicating with staff andclients the whole time.As quality director Jack Bowieexplains: “BSI understands howour business works and cantherefore see the benefit that wecan derive from the standards.Certification has given us a clearcompetitive advantage.”6Director Business wisdomMARCH 2012 DIRECTOR7
Making excellence a habitBuilding abusiness to lastQuality management is key to surviving toughtimes and achieving long-term successWinning customersby working togetherSmall firms can bid with greater confidence formajor contracts if they co-operate with each other.The BS 11000 standard shows them howCompanies under stressare usually firefighting,”says Charles Corrie,business programmemanager at BSI. “Have they takenthe time to find out what’s reallygoing wrong or to build a moresustainable strategy?”All too often, says Corrie, theanswer is “no”. And, while it isunderstandable that businessesmisdiagnose their strengthsand weaknesses when they arestretched, this can lead to decline.A sister publication to ISO 9001offers a solution. ISO 9004 providesa systematic approach to qualityimprovement that helps a businessweather periods of economicturmoil so they can prosper in thelong term. It does so by embeddingquality management principlesthat address the needs of allstakeholder groups, includingemployees, suppliers, shareholdersand the local community – notjust customers, who are the focusof ISO 9001.“Standardscan helpbusinessesweatherperiods ofeconomicturmoil”SELF-ASSESSMENT IS VITALThe rounded approach inherent inISO 9004 promotes self-assessmentas the key to identifying strengthsand areas for improvement.ISO 9004 builds upon ISO9001’s customer focus, broadeningthe scope of quality managementand enabling users to identifyopportunities for improvementand innovation in leadership,strategy, resources, processes andmanagement systems.ISO 9004 is applicable to allsectors. It can be used eitherindependently, in conjunction withISO 9001, or alongside othermanagement system standards.“The key is to embrace the conceptof quality management andcreate a culture of continuousimprovement,” says Corrie.The difficulty in biddingfor – and winning –major contracts has longbeen a bugbear for smalland medium-sized companies(SMEs). All too often they loseout to large corporates whichhave pricing advantages andmake slicker pitches.As David Hawkins, operationsdirector at PSL, a not-for-profitorganisation linking up withBSI to promote partnershipworking, says: “Every time alarge company wins and a smallbusiness loses a bid, the gapbetween the two gets bigger.”But, adds Hawkins, it doesn’thave to be this way. Heexplains that the government iscommitted to opening up thetender process for high-valuepublic sector contracts to SMEs– and to groups of small firmsthat collaborate with eachother – so there is a goldenopportunity to work together towin them.AN SME CAN USEBS 11000 TO…• Identify howrelationshipmanagement canhelp achieve itsbusiness objectives• Evaluate benefitsof entering into asingle or multiplepartnerships• Select the rightpartner for itsobjectives• Build a jointapproach based onmutual advantage• Develop addedvalue from therelationship• Develop andexecute apartnership exitstrategyTHE ‘PRE-NUP’ FOR BUSINESSThe crucial issue for small andmedium-sized firms is how tocollaborate most effectively,while at the same timeprotecting their own assets andcarefully cultivated reputations.They need a kind of pre-nuptialagreement in place.This, in essence, is what theBS 11000 standard can offer.It provides a framework formanaging collaborative businessrelationships for maximumbenefit to all parties.Using a step-by-stepapproach, it starts by requiringa company to apply bestpracticeprinciples to its ownway of working.“BS 11000 highlights theproblem areas in a collaboration,so they can be addressedupfront,” says PSL’s Hawkins.“This makes it easier forSMEs to build trust in eachother and give confidence topotential customers.”8Director Business wisdomMARCH 2012 DIRECTOR9
Making excellence a habitSignifyingbest practiceSix Sigma is a powerful business tool that – ifimplemented well – can deliver excellenceThe purpose of Six Sigma isto enhance business andquality performance byeliminating errors andwaste. At the core of this provenmanagement technique is theDMAIC methodology, whichstands for:Define the problemMeasure the current processAnalyse key dataImprove the processControl the process in futureSix Sigma was pioneered in the1980s by electronics manufacturerMotorola, before being widelyadopted, most famously by JackWelch at GE.The process has sincebeen combined with thecomplementary discipline oflean manufacturing to createLean Six Sigma, a powerful toolin promoting business andoperational excellence acrossindustry. The case study on FMGSupport (far right) shows just howeffective Lean Six Sigma can be,even in a service business.But if you’re investing in SixMAKEEXCELLENCE AHABIT BY…• Viewing training asintegral to yourbusiness strategy• Measuring theimpact of yourtraining techniques• Spreading thebenefits of trainingthroughout yourorganisationSigma to make youmore efficient, it alsomakes sense to save time andmoney by implementing itcorrectly – or, as the qualitygurus would say, by getting itright first time.A NEW STANDARD FORSIX SIGMAISO 13053 is the new recognisedstandard for Six Sigmaimplementation. For the first time,it defines and establishes a bestpracticeframework where therehas previously been no benchmarkor common language.ISO 13053 gives usersrecommendations on how toconduct each phase of the DMAICmethod. It also defines the roles ofthe people involved in Six Sigmaprojects, clarifying the expertisethey should have and the trainingthey will require.“Getting SixSigma right firsttime helps youcut costs andmaximise returnon investment”By specifying exactly what eachstage of the DMAIC methodologyshould include, and what rolesand responsibilities are involved,organisations can implementSix Sigma with confidence,minimising costs and maximisingtheir return on investment.For further information on our Lean SixSigma training, please visit:www.bsigroup.co.uk/trainingCASE STUDY: FMG SUPPORTMake your training payAs the UK’s largest independent fleetperformance improvement company, FMGSupport specialises in fleet incidentmanagement and roadside repair and recoverymanagement. With 450 staff, an annual turnover of£80m, and plans to grow further, the need to attract,retain and motivate a skilled workforce is a priority.Lean Six Sigma is the training method of choice forFMG Support because it not only aims to increaseefficiency and improve business processes, it is alsoeasy to measure return on investment. The companycan see how theprogramme impactson its business andbottom line. On oneproject alone, forexample, it producedcost savingsand cashflowimprovements of£800,000.Lean Six Sigmarelates to manyaspects of business and can apply to a large number ofsectors, but a particular feature is that once a staffmember has completed the five-stage improvementprocess to becoming a certified Lean Six Sigma BlackBelt, he or she can pass on the newly acquired skillsthroughout the organisation. That way, the maximumnumber of people can benefit from the investment.Derek Robinson, FMG’s business processimprovement manager, sums it up: “Since being SixSigma-trained, our business processes have becomemore polished, which in turn has resulted in significantsavings for both the organisation and our customers.”10 Director Business wisdomMARCH 2012 DIRECTOR 11
Achieving excellence5top tips for looking insideyour business☐Know the goals and celebratewhen each one is achieved.☐Have a clear business focus andthen communicate it regularly.☐Make sure as leaders youdemonstrate your commitmentto the cause on an ongoingbasis. Excellence is for life notjust a project.☐Make continual improvement ofyour products, services andprocesses a way of life.☐Keep it simple.top tips for looking5outside your businessFocus on your customers and☐make sure you deliver in linewith their expectations.☐Identify and manage the fewcustomers who deliver most ofyour business.☐Make sure that you understandand communicate your keybusiness difference.☐Continually assess yourcompetitive position – yourcompetitors will be looking at you.☐Identify your critical businesspartners and suppliers anddevelop relationships so that theyfeel engaged with your business.