The Business Excellence A to Z

A
 

Agility

An organisation’s ability to rapidly, efficiently, and effectively adapt to change.

Approach

The overall way by which something is made to happen. An approach consists of processes and structured actions within a framework of principles and policies.

B
 

Balanced Scorecard

A performance management and strategy communication tool that can be used to track and reward progress towards organisational objectives (conceived by Robert Kaplan and David Norton in the early 90s).

Benchmarking

A systematic comparison of approaches with other relevant organisations, which provides insights that can help the organisation take action to improve its performance.

Black Swan

A metaphor for an unpredictable event – an “outlier” – that we do not expect (since nothing in our experience has given us no reason to), which has a very major positive or negative impact and which, in retrospect, hindsight bias makes us think was predictable. It was first used by Nassim Nicholas Taleb and is also a salute to philosopher Karl Popper.

Business Excellence

Organisation-wide excellence that supplements Operational Excellence with excellent strategy, communication with all stakeholders, and – critically – results.

Business Model

The elements of the business that create and deliver value. These normally include the value proposition, the profit formula, key resources and key processes of the organisation.

Business Stakeholders

The people who provide funding for the organisation and to whom the Management Team ultimately report. Depending on the nature of the organisation, this could be the shareholders, partners or, in the public sector, the government, ministers or other politicians (see also: stakeholder).


C
 

Capability

The quality of being able to turn capacity into action and results by accessing relevant knowledge, competence, expertise, resources and processes.

Capacity

A measurement of what can theoretically be achieved, usually expressed in terms of size, volume or number. In organisations, this often refers to what the theoretical maximum output is compared to what the actual output is, with the result being expressed as a percentage.

Change Management

An approach for leading the transition of individuals, teams and organisations from their current state to a defined, desired future state. It is an organisational process aimed at helping stakeholders affected to accept and embrace changes in their business environment.

Common Cause

A cause of variation that is inherent in a process or system of processes. Failure to distinguish between special causes and common causes when taking action, results in frustration, waste, and greater variability.

Comparisons

Data used to compare the performance of one organisation or process with another.

Continual Improvement

The ongoing improvement of processes that lead to achievement of higher levels of performance through incremental change.

Control Limits

Statistical calculation of the natural variation, based on the observed level of deviation from average, in a process. Under normal conditions, results will fall between the upper and lower limits calculated. Data points outside these limits are normally the result of a “special cause”; something exceptional has happened.

Core Competence

An internal activity or capability that is central to the organisation’s competitiveness, profitability or efficiency.

Core Process

The key activities undertaken by the organisation to create value for its customers.

Corporate Governance

A framework of authority and control within an organisation used to help it fulfill its legal, financial and ethical obligations, helping to ensure accountability, fairness and transparency in an organisation’s relationships with all its stakeholders.

Corporate Social Responsibility

Corporate citizenship whereby an organisation considers its responsibility to the community and environment(s) in which it operates and takes responsibility for its actions to ensure positive impacts for all its stakeholders not just its customers, people, and shareholders.

Cost Benefit Analysis

A systematic approach to estimating the potential benefits of a course of action compared to the costs incurred by taking that action.

Creativity

The generation of ideas for new or improved products, services, processes, systems or social interactions.

Critical Success Factor

Something without which a successful outcome is impossible and for which no substitute is available. Often abbreviated to “CSF”.

CTQ / Critical to Quality

A structured approach for determining the factors that, from the customer’s perspective, are critical to the quality of the end product or service being delivered.

Culture

The specific collection of Values and Norms that are shared by people and groups in an organisation that control the way they interact with each other and with stakeholders outside the organisation.

Customer

The recipient of products or services provided by the organisation.

D
 

Design Thinking

An iterative approach to design, originally from architecture, that was adopted by business for product design in the 90s. In contrast to analytical thinking, which involves breaking things down, design thinking works to build ideas up, and typically follows a 7 step process of: define, research, ideate, prototype, choose, implement, and learn.

Diversity

The state of being composed of people who are different and extent to which the people within the organisation recognise, appreciate and utilise, the characteristics that make individuals unique. Diversity can relate to age, race, ethnicity, gender, beliefs, professional background, physical abilities & sexual orientation.

DMAIC

Acronym derived from “Define, Measure, Analyse, Improve, Control”; a structured process management approach commonly used in Six Sigma / Lean Six Sigma.

E
 

Employability

A person’s capability for gaining and maintaining employment. The meaning can be different depending on the perspective taken. For the individual, this could mean stability or mobility. For the organisation, it could mean flexibility.

Empowerment

The process by which individuals or teams are able to take on decision making responsibilities and operate with a degree of autonomy in their actions.

Enabler

Something that enables an organisation to achieve results. Enablers are things that an organisation can influence directly and acting on them produces a knock-on impact on the results the organisation achieves for its various stakeholders.

Equal opportunity

The practice of ensuring that all people receive fair and equal treatment regardless of gender, age, race, nationality, religion, disability or sexual orientation.

F
 

Fishbone Diagram

See Ishikawa Diagram (same thing by a different name; also known as a “Cause & Effect Diagram”).

Framework

A guide – which incorporates certain values, principles, or beliefs – that helps to organize, structure and communicate thinking.

G
 

Genba / Gemba

Derived from the Japanese term meaning “the current/real place”; in organisations this refers to observing the workplace to understand what’s really happening. (The different ways it can be spelt come from the options for writing Japanese using the Roman alphabet, both are correct.)

Good Practice

Approaches, policies, processes or methods that have been proven to lead to exceptional achievements. Since it is difficult to find out what is “best”, the term “good practice” is more useful. Ways to find good practice outside the organisation can include benchmarking and external learning.


H
 

Histogram

A bar-chart of numerical data that enables a rough estimate of frequency distribution, for example how long it takes to get to work in the morning. It is one of the seven basic tools of quality management.

Hoshin Kanri

From the Japanese term meaning “Direction Control/Management”, this is a structured approach for strategic planning, capturing both top-down and bottom-up views.

I
 

Innovation

The practical and successful translation of ideas into new products, services, processes, systems or social interactions.

Intellectual Capital

The value of an organisation that is not captured in its traditional financial accounts. It represents the intangible assets of an organisation – the combined value of the knowledge and capability of its people, the value inherent in its relationships, and other intangible things, such as processes, which enable its people to create value.

Ishikawa Diagram

One of the 7 basic tools of quality management, the Ishikawa Diagram is used to identify the potential causes of an observed problem (also known as a Fishbone Diagram or a Cause & Effect Diagram).

J
 

JIT

An acronym for “Just In Time”, JIT is a methodology for reducing flow times within production (and response times from suppliers to customers) that makes use of kanban and is part of the Toyota Production System. In the West, most organisations attempting to implement it failed to reproduce the success of Japanese firms as they ignored that fact that it is only one piece a wider system. Now it is not so often refereed to but its principles remain part of Lean.

K
 

Kaizen

Japanese word meaning “continuous improvement”, commonly used to describe on-going improvement activities in the workplace that leverage the input of people from all areas of the organisation.

Kanban

An operations management system that focuses on reducing inventories and Work In Progress, having things ready “just in time” for when they are needed. Originally based on the use of “kanban” (the Japanese for “signboard”), it is an effective approach to improve productivity.

Kano Analysis

A structured approach for product and service development based on customer needs, developed by Noriaki Kano in the 1980s.

Key Processes

The processes that are of most importance for delivering the strategy and driving the value chain of the organisation.

Knowledge

Knowledge is expertise and skills acquired by a person through experience and education, involving the theoretical and/or practical understanding of a subject.

Knowledge Management

The process of capturing, developing, sharing, and effectively using organizational knowledge in support of the achieving the organisation’s mission.

L
 

Leaders

The people who coordinate and balance the interests and activities of all who have a stake in the organisation.

Lean

A systematic approach to the identification, prevention, and elimination of waste in a process or system of processes taken from Toyota’s Production System and labelled “Lean” after it was introduced to America.

Learning Network

A group of people with a common goal or interest who pool their individual information, knowledge and experience to actively learn together.

M
 

Management System

The framework of processes, related performance/result indicators and process management and improvement systems used to ensure that the organisation can fulfill its Mission and Vision.

Mission

A statement that describes the purpose or “raison d’être” of an organisation, confirmed by its stakeholders.

Mobility

The willingness and capability of people to change their job or the working location.

Muda

Japanese word meaning “waste”. In Lean, there are 8 types of waste; defects, overproduction, waiting, non-utilized talent, transportation, inventory, motion and excessive processing.

N
 

Natural Variation

The level of deviation observed in the performance of a process due to variables that exist within the system. The objective of Six Sigma is to minimise the level of variation, ensuring the consistency and predictably of results (see also: Control Limits, Variation, Six Sigma).

O
 

Organisational Agility

The ability to respond and adapt, in a timely way, to an emerging threat or opportunity.

Organisational Capability

The ability and capacity of the organisation to achieve specific goals. The organisation can enhance this capability, for example, through external partnerships or internal learning & development.

Operational Excellence

A component of Business Excellence – the state of having excellent processes and supported by culture in which staff understand how the organisation works as a value creation system, and the organisation enables its people to fix problems when necessary.


P
 

Pareto Chart / Pareto Principle

Based on Vilfredo Pareto’s famous “80–20 rule” (the Pareto Principle) which states that 80% of effects come from 20% of causes, a Pareto Chart highlights the most significant causes of an effect helping focus effort on those things that can have the greatest impact.

Partner

An external party the organisation strategically chooses to work with, to achieve common objectives and sustained mutual benefit.

Partnership

(i) A durable working relationship between the organisation and partners, creating and sharing added value for both parties. Partnerships can be formed e.g. with suppliers, distributors, educational bodies or customers. Strategic partnerships support the strategic objectives of the organisation in a particular way.
(ii) A legal structure of an organisation where two or more people have agreed to cooperate with each other to advance their mutual interests and in which all partners are jointly responsible for the organisation’s liability.

PDCA Cycle

Acronym for “Plan, Do, Check, Act”, a cycle designed to support continual improvement based on learning. Also known as the ”Deming Cycle” though it was originally conceived by his mentor, Walter Shewhart.

People

All individuals employed by the organisation (full time, part-time, including volunteers), including leaders at all levels.

Perception

The opinion stakeholders have of the organisation.

Process

A series of activities (where the output from one activity is the input for another) taken to achieve an outcome. Processes add value by transforming inputs into outputs, using resources.

Process Excellence

A component of Operational Excellence – the state of having highly effective and efficient processes that have been designed and improved to have consistent delivery with minimum variation and minimum waste.

Process Map

A diagram that visually describes the process flow, from the initial trigger through to completion.

Process Model

A framework that provides a holistic overview of the organisation’s processes and how the different processes link together to create value for the customer.

Product

What a customer purchases from an organisation. This can include physical goods, intangible ones such as services, or a combination of both.

Pugh Matrix

A quantitative method, using weighted criteria, to rank multi-dimensional options against each other, which minimises subjectivity. It can be used to help make design or investment decisions.

Purpose Statement

Used by some organisations instead of either the Mission and/or Vision statements.


Q
 

Quality

An attribute or property that something has when it is “fit for purpose”. As this can be considered subjective, for the avoidance of doubt, it ultimate judge of this is the customer.


R
 

Risk

Exposure to loss or harm.

Risk Management

A systematic approach for identifying risks to an organisation, understanding their potential impact, likelihood of occurrence and possible actions to reduce the exposure.


S
 

Scatter Diagram

A tool to represent, compare and analyse two sets of data, which maps the data – as a collection of points – onto a 2 dimensional area bound by an x and y axis, where the position of each point is determined by the data.

Seven Basic Quality Tools

The set of tools that were developed in the 1950s and 60s that form the basis for approaches such as Six Sigma and Lean. The tools are Flow Chart, Check Sheet, Histogram, Pareto Chart, Ishikawa Diagram, Scatter Diagram and Run Chart.

SIPOC

Acronym derived from “Suppliers, Inputs, Process, Outputs, Customers”; a method for providing a high level description of a process, commonly used in Lean and Six Sigma.

Six Sigma

The name given to an approach and set of tools, initially pulled together by Motorola from existing quality management tools, which can be used to reduce variation in a process.

Society

The social infrastructure outside the organisation that can be affected by the organisation.

Special Cause

A cause of variation that is not inherent in a process or system of processes. Failure to distinguish between special causes and common causes when taking action, results in frustration, waste, and greater variability.

Stakeholder

A person, group or organisation that has a direct or indirect stake or interest in the organisation because it can either affect the organisation or be affected by it. Examples of external stakeholders are owners (shareholders), customers, suppliers, partners, government agencies and representatives of the community or the society. Internal stakeholders are people or groups of people within the organisation.

Strategic Learning

Ongoing learning from observing the environment, monitoring progress towards strategic objectives, and other sources that results in changes to “intended strategy” and delivers a “realised strategy” which includes “emergent strategy” as required.

Strategy

A high level plan, which is crafted and revised, that describes the tactics by which an organisation intends to achieve its Mission and reach its Vision, that are subsequently translated into aligned strategic goals and objectives reflecting what the organisation has to do.

SWOT Analysis

Acronym derived from “Strengths, Weaknesses, Opportunities and Threats”; a structured approach used to evaluate an organisation’s internal and external environment, segmenting both into positive and negative factors to provide four groups of strategic influencers. Can be used at an organisational level, such as during a strategic planning process or to focus on specific topics or situations.

T
 

Takt Time

From the German word “takt” (meaning musical time or rhythm), “takt time” is the pace at which things need to be finished to meet customer demand. This lean concept first appeared in the German aviation industry in the 1930s and was in use at Toyota by the 50s. The concept is simple yet powerful – if you produce things too quickly you get excess Work-In-Progress and slowed process, if you produce things too slowly, you get unhappy customers. Consequently, maintaining the correct rhythm is important.

TRIZ

Russian acronym for “Theory of Inventive Problem Solving”. TRIZ is an approach to solving problems – typically in the domain of product development – that require inventive solutions. It involves abstracting the problem to a conceptual level, examining conflicting requirements (or “contradictions”), finding ways to resolve the contradictions at the abstract level, and then translating the solution back to the specific.

U
 

Upside Risk

A confusing term that risk managers sometimes use to refer to opportunities (that exist not because of risk but because of uncertainty).

V
 

Value Proposition

The differentiating value the organisation’s products and services offer to customers.

Values

Operating philosophies or principles that guide an organisation’s internal conduct as well as its relationship with the external world. Values provide guidance for people on what is good or desirable and what is not. They exert major influence on the behaviour of individuals and teams and serve as broad guidelines in all situations.

Value Stream

The entire process chain that transforms supplier inputs into outputs which satisfy a customer need. Value stream mapping is a lean method to understand how a system of processes operates and maps the flow of information and (where applicable) material, to help identify sources of waste.

Variation

Deviation from a target outcome of a physical attribute (such as size or colour) or an intangible one (such as waiting time).

Vision

Description of what the organisation is attempting to achieve in the long-term future. It is intended to serve as a clear guide for choosing current and future courses of action and, along with the Mission, it is the basis for strategies and policies.

W
 

Waste

In Lean, there are 8 types of waste; defects, overproduction, waiting, non-utilized talent, transportation, inventory, motion and excessive processing. See also: “muda”.

Work In Progress (WIP)

Something that has been started but not finished and so cannot proceed to the next step in the process flow. WIP is a source of waste and should be kept to a minimum.

Work Instruction

Detailed, step by step description of a task. In a Process Model, this is the lowest level of detail.

X
 

X

An independent variable that drives the value of another “dependent variable” commonly denoptaed as “y”.

Y
 

Y

A function of X. 🙂

Z
 

Zebra

A member of the equestrian family of animals; a bit like a horse wearing pyjamas.

Zero-Sum Game

A situation in which one party’s benefit is exactly cancelled out by the other party’s loss. The opposite of excellence.