Small to Medium Enterprise - Best Practice Guide
WHAT IS BEST PRACTICE?
Organizations today operate in an environment of increased competitiveness and change. Successful organizations are those that are effective at change, either through creating new markets or meeting new goals for existing products. Yet many companies are ineffective at change and hampered by poor control of their product development operations.
Many companies are unable to accurately estimate, control and improve specific product or contract profit margins, product ship dates, or product quality. Companies know that they need to improve, but with inadequate data they often find themselves unable to prioritize problems, leading to excessive improvement initiatives performed in an unfocused manner.
Companies are left either spending very little money on improvement because they're unsure how to best allocate the money, or are spending a lot of money very ineffectively on numerous improvement efforts going in 20 different directions.
Best practices can be defined as "those practices that have been shown to produce superior results; selected by a systematic process; and judged as exemplary, good, or successfully demonstrated", these practices are then adapted to fit a particular organisation (American Productivity and Quality Centre, 1997). The use of best practices, when incorporated within all areas of an organisation, including its stakeholder relationships, can lead to an organisation attaining world class performance.
While there are an infinite number of potential best practices used by organisations across the world, generally, when people talk about best practice, they refer to the high performing practices that proliferate in organisations recognised as having attained world class performance levels. Often, an organisation may use one or more best practices and become renowned for their performance in these areas, but unless best practices are adopted consistently across all the functions of an organisation, as encouraged by business excellence models, it is likely that world class levels of performance will remain out of reach.
'World class' can be defined as a recognition of organisational performance levels that has been 'rubber stamped' by an impartial assessor authority/body. Today in the west, this term is applied to any organisation that succeeds in winning a national quality award or national business excellence award. To give some idea of the difficulty in achieving these sort of performance levels it is worth mentioning that in New Zealand, (home of the Centre for Organisational Excellence Research (COER,) the developers of the BPIR) only two organisations have been recognised as world class in this way in the nine years that the NZ Baldrige based national award has been in operation, and in the US out of the hundreds of applicants for the Malcolm Baldrige Quality Award up to the year 2000, only 40 have seen ultimate success.
The BPIR team's experience is that whilst there may be at a certain point of time, a world's best practice for a particular process or area, most organisations are just searching for better practices that they can quickly identify and implement. This viewpoint is supported by Camp (in Ashton's book, 1997) who states, "the point of best practices is to discover and close performance gaps, so defining "best" might be as simple and subjective as what an executive instinctively feels is best, knowing the business and its competition. Adopting this process does not necessarily mean aiming for world-class".
Who uses best practices?
Organisations that are serious about improving their performance, financial or otherwise, continually search for better business practices. The fastest and easiest way to improve is to compare and learn from other successful organisations (for example, through using a benchmarking approach). To quote a very frequently used idiom among exponents of the use of best practice, "there's no point in re-inventing the wheel". Most organisations use or have used best practices at some point, consciously or not. Over the years best practices emerge, and are later surpassed and proved inefficient as the world and the way business is done constantly changes, this is why so many high-performing organisations adopt a culture of continuous improvement.
What are the common challenges associated with the best practice approach?
The difficulty of incorporating best practices is succinctly put by Camp (1995), the acknowledged father of benchmarking. Camp recognises that many rationales and approaches other than benchmarking can be used to identify best practices, but that "there will still be the need to innovatively and creatively implement the best practices". There are various difficulties involved in the process of improving by learning from best practice, key among these are:
1) Having sufficient knowledge of your own systems and processes to be able to compare against others
2) Knowing where to find best practices
3) Knowing whether a particular practice is suitable for your situation
4) Adapting the practice to your organisation
5) Finding the time and other resources for the above
6) A key to tackling the difficulties above is to use a proven process for "finding and implementing best practices that lead to superior performance", this is why benchmarking is used as a tool to improve business performance.
How can the BPIR help?
The BPIR addresses these issues in a number of ways. Information relating to tools and techniques that can be used to understand your own processes and also to adapt the processes of others, are available within the BPIR databases.
In answer to the question of organisations not having the resources or knowing where to find, best practices, a huge resource of good or best practices as used by organisations from around the world are also available in the databases in the form of case studies and survey information.
In addition to these, details of thousands of organisations that have been recognised by awards for excellent performance or by researchers as having excellent practices are provided as a starting point in the search for benchmarking partners. Having such a resource on hand helps to reduce the cost/time required when searching for best practices.
What is the track record for users of best practice?
The potential improvements to be gained from adapting and incorporating proven high performance practices in your organisation can be anything from small continuous steps of improvement, to radical breakthroughs that result in significant positive change. Like anything else that reaps rewards however, much work has to be done and done properly to enable these potential gains. Benefits from the use of best practices can be best understood through reading the section on benchmarking.
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