Three Aspects of Business Excellence: Best Practice Business Strategies

The best companies in the world all use the best methods available to them to increase their top line and bottom line. These methods are described here.

The three elements of a business that define profitability are how much is sold, the features that the product possesses, and the efficiency with which it is produced. An easily remembered hook is “How Fast, How Good and How Cheap”. For each of these three elements there is a Business Excellence tool. “How Fast” is maximized using a Lean Manufacturing method, “How Good” is enhanced using a Quality Program, and “How Cheap” is optimized using Rational Management Processes.

The three aspects of Business Excellence are not independent. There are overlaps between each of them, not least because the exponents of each have tried to widen the scope of their methods.

Business Excellence: Lean Manufacturing

There are several tools available to increase output and reduce cycle times. They all rely on reducing inventory levels in the work area. Although the phrase “Lean Manufacturing” has a specific meaning in some quarters, it is used here to mean any method that reduces cycle time by keeping inventory levels low. Examples of lean manufacturing methods include Kanban, Theory of Constraints, and Just in Time (JIT).

Business Excellence: Quality Tools

The best companies strive continuously for quality improvements, and have a focused program to this effect. There are many of these programs available, such as TQM, Kaizen, and Six Sigma.

TQM – Total Quality Management – educates the entire workforce (hence “Total”) on the benefits of quality (reduced waste, lower cycle time, lower costs, etc.), where quality is defined by the customers, both internal to the company as well as external to it.

Kaizen means “Improvement” and tries to improve every aspect of the business, from management to tool set-up, to production practices. It tries to introduce a human element to improvement, and often focuses on removing difficult work, since human error is the most difficult to eliminate.

Six Sigma aims to reduce defect levels down to around 3 parts per million. The focus is to recruit the best people and get them to work on the hardest problems. It attempts to characterise a process output by finding out, using sound statistics, what inputs affect the output. It was first used by Motorola, but is now in widespread use.

Business Excellence: Rational Processes

There is another aspect to Business Excellence that is better suited to deal with management issues. For example, how to decide which engineer should be assigned as project leader on a new machine installation. The rational thought process can be formalized to a large extent, and one of the methods in common use is the Kepner-Tregoe Rational Thinking management program.

It has five main components:

  1. Situation Appraisal: This is what every good manager does regularly, set out in standard form
  2. Problem Analysis: Formal method to solve any problem, product, personnel, etc
  3. Decision Analysis: Standard method to remove emotion and inconsistency from decisions
  4. Potential Problem / Opportunity Analysis: Indentify possible problems, and take action accordingly
  5. Incident Mapping: Summarise a complex incident and identify the true root cause

Summary of Business Excellence Tools

There are many methods to make a product or a service faster, better and cheaper. Tools such as Theory of Constraints, Six Sigma, and Kepner-Tregoe, are used together and are closely linked. Proficiency at using these Business Excellence tools leads to more product being made, and made with higher quality, more cheaply.

Business Etiquette of Spanish Market: Business Culture and Recommended Foreign Market Entry Strategies

The high income Spanish market is one of the most promising and rapidly developing markets of the European Union.

Its business etiquette is a vital issue to study before attempting the foreign market entry.

The major language used in Spanish business circles is Spanish. Though many businessmen speak English, the country’s business culture prescribes using Spanish in correspondence and at personal meetings.

Foreign Market Entry

Government incentives for foreign investors are a favorable feature of the Spanish market.

Madrid and Barcelona are the largest business centers of the Spanish market. Therefore, the U.S. & Foreign Commercial Service recommends foreign market entry to be conducted by means of an agent or distributor, or via establishing a local office in one of the two major cities.

Both price and quality are equally important for Spanish business. Other significant issues are customer service, credit terms, and marketing assistance in promoting the goods or services of a foreign exporter.

Highly popular in Spanish business is using a credit for purchasing goods, and banks compete for offering the coverage.

Doing Business in Spain

Though Spanish government welcomes foreign investors, the bureaucracy accompanying the foreign market entry is significant. Since usually Spaniards cannot be found in a hurry, it may take some time and effort to get certain results by the deadline.

Respect to the country’s language, history and traditions is highly valued by the hospitable citizens. As for communication, it is normal for Spaniards to speak fast and interrupt each other.

Business Etiquette

The business culture of the Spanish market is more formal than that of the US. However, there is nothing better for entering the market than a personal meeting. Phone calls, e-mails or other correspondence will not provide such a good effect as personal face-to-face contact. Personal relations is what Spanish business values most of all.

  • Formal clothing is preferred by Spanish businessmen. Usually it is a business suite for women and a suite with a tie for men. In Spain dressing is to reflect business and social status.
  • Business cards are very common, and are expected at personal meetings. They should be either in Spanish, or in two languages – English and Spanish.
  • A handshake is always appropriate at the beginning and at the end of a meeting along with basic courtesy titles: Senor for a man, Senora or Senorita for a woman.
  • Appointments are recommended.
  • Business lunch usually starts at 2 PM, and may last up to 2 hours.
  • Dinner starts at 9:30 PM, and may last till midnight.

General Information

  • Usual business hours are from 9 AM to 6 PM.
  • Banks are open on weekdays, from 8:30 AM to 2:30 PM, and sometimes on Saturday mornings.
  • Shopping can be done in department stores from 10 AM to 8 PM, Monday through Saturday. Smaller stores and offices are usually closed between 2 and 4 PM.The official currency is Euro.
  • Visa is not needed for the US citizens to be in Spain for 90 days.

Operating Business Plans to Win in the Downturn: Smart Businesses that Plan Will Thrive During the Recession

Difficult economic times call for extraordinary insight and foresight. Smart business planning can be the key to succeeding, even survival, during the economic downturn.

The purpose of an operating business plan is to guide a company or not-for-profit organization in its day-to-day operations. The hard thinking and the tough decisions that go into a good solid business plan are more important in today’s challenging economic environment than ever before.

An operating business plan transforms carefully thought-out goals and objectives, usually from a previously developed strategic plan, into performance targets and the action plans to accomplish them. The very process of developing a good operating plan can in itself help a company sharpen its direction and focus.

Developed properly, it is an operations road map for the coming year that provides a common set of guidelines to be shared among the company’s leadership and decision makers. (It should be noted, a different kind of business plan is required when approaching lenders and investors for additional capital. It is more detailed and must answer a wider range of questions.)

Pulling together either type of business plan requires a substantial amount of organization and discipline — and hard work. The eight steps below, when developed, become the sections of an annual operating business plan:

  1. Overview

This is a summary, or abstract, of the completed operating plan for the year. It is among the first sections started and always the last one completed.

  1. Mission and Values

Describe what is different, and what will be different, about the company’s operating environment during the term of the business plan, usually one year.

This section should also include a revisit to the question, “what business are we really in?” If that sounds odd, numerous traditional telecommunications companies have disappeared over the past few decades because they failed to realize they were in the communications business, thinking wrongly they were just in the telephone business.

  1. Industry Scan/Risk Analysis

This is a critical section. Here a company must analyze trends affecting the company’s industry and markets, and the key opportunities and risks these present to the company, and what the company must do about them. This means changes to previous business activities, such as what the company will continue to do, what it will do differently, and what it will start doing and stop doing.

  1. Products and Services

This section is a discussion of how the company earns revenue, i.e. its products and services, and how these are delivered and why.

There should also be a comparison of the company’s products and services with competing products and services.

  1. Assets to Profits

Do an inventory of the physical assets such as buildings, inventories, leases, capital equipment, new capital and other resources needed to convert the company’s products and services into revenue.

The focus is on how to make the most efficient use of these assets in order to generate revenues and subsequently, profits.

  1. Operating Priorities

Describe operating priorities for the coming year, changes from past years, and why. What opportunities will present themselves in the coming months and how should the company capitalize on these.

This section should also discuss how operations can be affected by threats, trends, business cycles and other issues, and how will the company deal with them, i.e., capitalize on some, adjust to others, neutralize the rest.

  1. Marketing Plan

Include a summary of the marketing plan, focusing on marketing priorities, and how the company is differentiating itself, and its products and services, from competitors and competing products.

Describe the markets for these, and discuss the marketing strategies and tactical approaches the company is taking/will take.

Include also any issues that may affect the company’s ability to achieve sales and revenue targets, and what is being done about them.

  1. Financial Plan

This should contain a candid assessment of the company’s financial outlook for the coming year. The section is essentially a summary of the budget for the coming year, including capital requirements, revenues and expenses, and earnings.

It should also focus on financial issues related to the coming year’s operating priorities, and include clear financial performance measurements, by month, quarter and for the year.

Coping with Change in a Business Environment: How to Help your Employees Deal with Workplace Change

Change is becoming a constant in the business world and employees are frequently expected to cope with more and more change.

Change is a necessary part of business and is becoming ever more frequent. Yet for some employees, change can mean stress. If you look at the statistics, people not adjusting is a common cause of large scale projects not realising their full potential. So how can you, as a business manager, help your staff cope with change better?

Manage the Volume

Some people cope better with change than others, but most people become less flexible with change the more they have to cope with. If possible, try to limit the amount of change in one area to an acceptable limit.

Understand How People React

Most people do not like change; they like things to pretty much remain the same, knowing what they have to do and how to do it. If these factors change there is uncertainity – uncertainity about their ability to do the job, even if there is a job!

Some change can be positive, such as a promotion into a new role, but even that has a period of uncertainty where the person has adjustments to make. It may mean working with different people, a different manager, more or different types of responsibilities, and different expectations.

Some change is negative, such as loosing a job or loss of responsibility. Most changes have both positive and negative aspects.

Tell People What is Happening

People want to know what is going on. If they don’t know they will grab any threads of information they hear and often make up the rest. Provide people with as much information and detail as you can and make yourself available to talk it through. Sometimes people have to hear things in different ways to fully understand and appreciate the implications.

Sometimes management assumes that the reason for the change is very clear and obvious to the entire organisation. This isn’t always the case and for some the reasons may seem very unclear. Take the time to give people background details and reasons for the change. If corporate objectives have changed, help your staff understand this and what it means to them.

What Does the Future look Like?

To cope with change people need to understand what it means to them. While it might be great for the organisation as a whole, it might be difficult for some people to see any benefits in their particular area, and in some cases there may not be any (for example, their department may no longer exist).

The Negative Implications

In many changes, there are some people who do not get the benefits (such as people demoted or made redundant). Be sympathetic to their situation and offer them any assistance you can.

It Takes Time and Patience

It does take time for people to fully assimilate the effects of a change. Don’t expect them to be positive immediately and give them time and opportunities to air their concerns in a safe environment, without any implications. Acknowledge their concerns but help them move forward into the new world of the change.

Be a Role Model

Your staff will look to you as how to behave and react to the change. Your positive attitude will rub off on your staff and they will follow your behaviour in making the necessary adjustments.

Understanding that change isn’t easy for people is the first step to helping them cope. Give them plenty of information and opportunities to discuss the impact. Change needs to be communicated, both as the implications to the company, but also to the individuals. It will take time for people to adjust and fully appreciate what is now expected of them. Be patient but also be a role model for positive reactions to change.

Define Effective Vision and Business Strategies: Strategic Thinking for Strategic Objectives and Business Planning

An effective business vision and set of business strategies requires good strategic analysis and strategic thinking and is based on business strengths and opportunity.

The vision is the long term goal of the business and should be ambitious without being a complete fantasy. That goal should be broad and forward thinking and unite the business with a common purpose. The business strategies are selected based on existing capabilities and strengths and that are the means to achieve that goal. Those business strategies will move the business forward to the goal either in one step or in multiple steps over time.

Vision

To be effective the vision must be simple and succinct, it must be something that the people within the business can identify with and it must have a tangible impact within the business. For example Ford Motor Company’s vision is: “to become the world’s leading consumer company for automotive products and services”. Or Bill Gates of Microsoft had the vision of “Windows on every desktop”.

Business Growth Strategy

The business strategies should be based on comprehensive and insightful analysis of the business strengths and the market opportunity available. SWOT Analysis in particular is useful to do that. Business growth strategy is typically focused in one of three sales areas:

  • New – introduction of a completely new product or product design or the latest and greatest version for example cars, electronics, mobile phones…
  • Differentiation – establishing a brand that will typically command a higher price for example designer clothes and accessories, premium brand cars…
  • Price – low cost or commodity pricing to reach a mass market for example budget airlines…

Other Business Strategies

Importantly, the business strategies should also focus on other business strategies for example:

  • Financial – profit margin improvement
  • Customer – service improvement or added value services
  • Internal – efficiency or effectiveness improvement
  • Learning and Development – training programme or skill development capability leading towards new innovations

Characteristics

The selected business strategies should share characteristics that provide clarity so that each one is:

  1. Clear and specific
  2. Measurable in some way such as increased sales, reduced cycle time, increased throughput…
  3. Achievable within the next six to twenty-four months
  4. Results-oriented and so expected to provide some tangible benefit to the business

For example “Increase sales” should become something like “Increase sales to local small manufacturing businesses by 25% over the next 12 months”.

Step Two Completed

This completes step two of six in Strategies to Improve Your Small Business. The key to selecting successful business strategies lies in a clear appreciation of business strengths and an insightful understanding of the market opportunity based on good strategic analysis and thinking. Above and beyond that the business strategies need to move towards the longer term goal and this business planning needs to be clearly stated and communicated.

Example Project Report Format for Project Status: Project Reporting Tells Project Progress and Key Project Risks

Project status reporting is an essential and regular task. Project reports must be clear, concise and complete and contain the right level of detail for target audience.

This project report example is based on this report format that suggests the following sections: summary of project status and key risks, project metrics, work finished, about to finish, started and due to start. The target audience for this example is senior management who are following a project to implement a new SOP management system.

Project Status

Project is on-track. Slight delay to sign-off of system requirements will not impact the project schedule. The project will now move into development and solution design. The development system has been installed and the software will be deployed and configured next week. No new risks have emerged.

Key Risks

  • Software installation and key configuration is risky due to this being a new vendor product. Mitigation has been to engage vendor consultants during this two-week phase and to have them on call during the test phase
  • Lack of test resource to write business test cases for acceptance testing. Mitigation is to backfill two key business resources for the next four weeks. This will be paid from project’s 10% contingency fund
  • Decommission existing SOP management system. Maintaining a watching brief on project tasks

Project Metrics

  • Project schedule is on target with 0 days time delay, 24% of schedule is complete
  • Project cost is 500% of target spend with forecast budget due to paying vendor earlier than predicted but this has no impact to overall cost of project. Total project cost is on target with 0% cost variance. 40% of total budget has been spent

Project Tasks Finished Since Last Report

  • Completion of requirements workshops
  • Approval of quality plan and training plan
  • Development environment installed in preparation for deployment of software
  • Business information cascade on new SOP management system and its benefits

Project Tasks Still in Progress and Finishing

  • Technical installation and configuration plan to be approved
  • Design documentation being circulated for final review and approval
  • Creation of accounts for development environment

Project Tasks Continuing

  • Business process redesign to use SOP system
  • Business conventions for using the system such as title and author Starting
  • Installation and configuration of system according to system requirements design
  • Training of business users to use new SOP system to confirm design detail and help to develop correct test cases
  • Communication pack to cascade information about schedule and key system features

Example Project Report Format

This audience requires high level information, not detailed project planning information, and information needs to be succinct and focus on the few things that matter rather than everything that can be reported. In particular, the audience will want to know if the project is on track and whether it needs any help with any risks or issues. In the final analysis the presentation, content and level of detail needs to be determined for the audiences. However, a project will want to “standardise” on a report format to simplify the production and delivery of project information and in particular to not have multiple reports, report formats and potentially giving different or confusing information dependent on which report is read. Following a single report format and adjusting the level of detail for the audience will help to achieve consistency and clarity for all concerned.

Project Sponsorship: How to Effectively Champion a Project

The Project Sponsor is more than a figurehead. It is a vital role on a Project and an effective Sponsor can be the difference between success and failure.

To sponsor a project means more than simply putting a name on the business case and turning up to the occasional meeting. Sponsorhip is a fundamental activity and plays a critical role in the eventual success or failure of the project. Many sponsors make the mistake of believing that they don’t need to get involved; that the project shouldn’t take up too much of their time. In fact, the most successful projects have sponsors that understand the importance of their involvement.

The Project Driver

The sponsor of the project is the driver who will push the project forward in the organisation. If the sponsor isn’t active then the project will fail to gather momentum and its priority will begin to slip against other, more important projects. Without support a project will not get the necessary resources; be that time, people or money.

It is the sponsor’s role to foster support for the project within the senior management levels of the organisation. The sponsor should be demonstrating both public and private support and helping all staff understand why this project is so important.

The Project Champion

The sponsor can articulate the business purpose for the project in a few succinct sentences – that’s how well they understand the project! They ensure that the project remains aligned to the strategic goals of the organisation, and through timely involvement ensure that key decisions are made. A project manager is responsible for the running of the project, but ultimately it is the project sponsor who has more power and influence in the organisation and can make things happen.

It is the sponsor who is accountable for the success or failure of the project. This means that the project sponsor will have to make the key project decisions, which are outside the approved boundaries for the project manager. Through an effective working partnership, the project manager supports the project sponsor, ensuring he or she is aware of the key issues on the project and providing them with possible alternatives.

Project Leadership

During times of change, staff look to management for direction, particularly their own manager and also senior managers. The sponsor has the important task of communicating the business purpose for the project and ensuring that the benefits are understood across the organisation.

The project sponsor is a vital role on a project and can make the difference between benefits that are fully realised and benefits that are only partly achieved. Projects need support and must be driven within an organisation. There will always be an extensive portfolio of projects and only those that are most critical will survive. Therefore, it’s is ultimately up to the project sponsor to ensure that the project is given the backing it needs.

Test Planning for System and Acceptance Testing: Test to Ensure System Meets Requirements and is Fit for Purpose

Testing is scheduled as part of the project planning process and whilst it is recognised as critical to a successful project it is often squeezed for time and resources. Unfortunately, faults not found during software testing are often found in business use when it is more expensive to fix and has a greater impact to the business.

Purpose of Software Testing

Testing can be carried out in a number of ways from manual testing to automating it. If people are appropriately trained it can be carried out by existing staff, temporary or contract staff, outsourced to another organisation or by a software program. All of these approaches share a common purpose:

  • To ensure that the requirements are met by the system
  • To find software faults during testing so that they are not found later during production use
  • To accept [or not] the system as fit for purpose and ready for business use

Approach to Software Testing is Defined in Test Plan

The approach to software testing is determined by the project and is documented in a test plan:

  • What type of testing is done
  • What procedures need to be followed [record results, reporting faults…]
  • How many cycles of testing are planned [test-fault-fix-retest]
  • Who does the testing and what documented tests do they do
  • When, where and how the testing is done, what equipment and accounts are used

Types of Software Testing

There are a number of different types of software testing and each type has a specific purpose. The four general categories are:

  1. Informal Testing – a useful technique to confirm correct test cases, identify gaps in testing or find problems early. It is also useful to investigate potential risk areas by informally “testing”
  2. Unit Testing – usually carried out by IT and is focused on the software developed unit or module each unit is tested in isolation. For packaged software or vendor supplied products unit testing is either assumed or confirmed to have been carried out by the vendor
  3. System Testing – usually carried out by IT prior to business performing [user] acceptance testing. Testing is designed to exercise the entire system including both functional and non-functional aspects. If the system or application passes this testing it moves on to acceptance testing
  4. Acceptance Testing – usually carried out by the business and is the final stage of testing with a decision as to whether the system is fit for purpose and is ready for deployment to the business

The main types of testing:

  • Functional – system functions [enter, validate, save, retrieve, find record…] as expected or does what is required including things like usability and security
  • Error – system handles error conditions correctly for example if incorrect data is entered
  • Non-functional – system does correctly other tasks that typically do not involve user interaction for example batch jobs or system backup and restore
  • Performance – user functions are performed in a timely and acceptable manner. This is especially important for systems with a geographically distributed set of users
  • Multi-user – system handles correctly multiple users doing the same thing at the same time – changing a record at the same time
  • Load or volume – system performs appropriately under defined load conditions – number of users using the system at any one time

Test Planning

Test planning is part of project planning and is defined by the project in the test plan. The test plan documents the approach to testing and selected types of testing. The tests themselves are written into test cases ready for execution. Effective project planning of this phase is essential with over-optimism often shown in the time and effort to agree test plan, write test cases, execute tests and document results.