What It Takes To Become World Class … And Why Kiwis Fail

The melodrama of Air New Zealand seemed to reinforce and vindicate the critics who claim New Zealand is going to the dogs – or dingos. Head office, or the regional reporting centre, is invariably in Sydney or Melbourne these days. Why can’t we foot it on the world stage, or even at least beat the Aussies now and then? In the world of sport we manage to perform creditably on occasions, but even in that arena our performance is patchy.
The answers, say the experts, lie in becoming ‘world class’. Achieving this goal rests in the hands, or more accurately the mind, of every chief executive in the land. If our organisations were committed to becoming world class we would turn the slide down virtually every international performance indicator into an elevator ride to the top. Sounds simple, but is it?
Politicians and bureaucrats push us to embrace the ‘knowledge economy’. But advocates of world-class performance and business excellence believe radical change in our philosophical approach to doing what we do, rather than policies to shepherd the economy in new directions, is the key to successfully unlocking both personal and enterprise potential.
As Sue Wright, chief executive of New Zealand’s Business Excellence Foundation, points out: “Because we are small country we need to encourage everyone, even central and local government, to optimise the use of our resources. We must manage our resources in way that is both efficient and effective.”
The thinking behind this approach could be described as combination of market demand and good management to identify the future. If organisations strive to reach higher standards of business excellence, preferably world-class standards, business and economic opportunities will ultimately identify themselves – and whatever we do we’ll do it successfully.
Why struggle to become world class? It is not, after all, easy to achieve. But for start, there is direct correlation between the performance of management systems and results according to The New Zealand Benchmarking Club, set up by Massey University in poartnership with the New Zealand Business Excellence Foundation. In other words, excellence pays.
But there is widespread and innate leadership reluctance to embrace both the concept and the process of world-class achievement. Striving for excellence is not, it seems, prevalent Kiwi management characteristic. The exceptions stand out simply because they are just that, exceptional.
For instance, only two firms in the past 10 years, have achieved world-class status as defined by the New Zealand Business Excellence Awards, which provide the only local evaluation based on internationally calibrated performance standards. Toyota Thames in 1993 and Telecom’s Yellow Pages Directories in 1995 were awarded National Quality Awards, the equivalent of what is now called National Business Excellence Award, Gold Level. This ranks them as ‘world-class’ organisations.
The New Zealand Business Excellence Awards are run by the New Zealand Business Excellence Foundation, formerly the New Zealand Quality Foundation. The criteria and the evaluation process are aligned with international awards programmes which identify ‘world-class’ organisations, such as the US Malcolm Baldrige Awards, European Business Excellence Awards and the Australian Business Excellence Awards.
The six organisations, which last month picked up this year’s Business Excellence Awards at levels below ‘world class’ but on track for greater recognition, are listed in this cover story.
But even the organisations that make the effort to take part in the awards programme have trouble making the move from “good to very good”. They seem to strike what Sue Wright calls “barbed wire barrier” to further progress. New Zealand organisations simply do not “hunger to identify the very best way of doing things” and in particular they “hesitate to look outside their own sector” for the answers. Being the best in particular sector is frequently long way short of world class.
Companies invariably describe themselves and their activities as “unique” however all organisations have the same elements in their business practices. (These are leadership, planning, customer and market knowledge, information, people and pro-cesses.) They use this rationalisation of being unique to avoid more meaningful but harder-to-match external examples. But as Tranz Rail executive, excellence devotee and awards judge, Jeff Heisler, points out: “At least 80 percent of all [management] issues are common across all other businesses.”
Excellence advocates, like NZIM national chairman and NZ Business Excellence Foundation director Doug Matheson, argue that New Zealand enterprise needs to become world class to cope successfully with globalisation. “We must perform at least as well as, if not better than, our competitors anywhere in the world,” he says. “It is matter of urgency that New Zealand organisations adopt leading-edge management systems and operating frameworks to achieve world class as quickly as possible.”
Matheson also believes that if New Zealand wants to get back into the OECD’s top 10 of performing economies by 2010 then “more businesses will have to become committed to achieving world-class performance”.
Jim Scott, quality manager at export award-winning company Svedala Barmac (now Metso Minerals), agrees with the global perspective. His company entered the Excellence Awards programme for the first time this year. “We export 95 percent of our output,” says Scott. “That means we compete on the world stage. Globally you have to know where you are at.”
The recently purchased and renamed Svedala, is already high export achiever – so why push it further? “You don’t know how good you can be till you start to measure yourself,” says Scott. “And globally, you have to know where you are at. The awards process provides one of the few genuine indicators of where you are and where you are going.”
Tranz Rail’s Heisler has similar, though slightly different perspective of the global influence. Tranz Rail is, as reconstituted freight-only operation, preparing to take part in the Business Excellence Awards after 18 months to two years’ preparation. Being world class is, he says, “enormously relevant to our customers because we are key part of their supply chain, domestically and internationally. We must make it possible for them to compete internationally.”
Tranz Rail also operates in the world capital markets. “To attract equity we must demonstrate that we are superior [performers]. We need to look beyond ourselves and produce results that will attract investment,” says Heisler.
There’s yet another, more personal, reason for striving to be excellent. Companies that go down the world-class track report dramatic improvements in employee and management attitudes. “Everyone gets personal satisfaction from being good at what they do. They love to be part of winning team,” says Horner & Partners managing director Dennis Horner, whose company achieved Bronze Level status in the awards programme last year.
“My philosophy is, and always has been, to focus on being the very best we can. Do this and the rest will fall into place. By footing it with the best in the world – other things simply follow and that’s how it has been since we took part in the programme.”
Among the “things that simply followed” for his Auckland-based executive recruitment company was buy-out by the world’s largest recruitment firm, TMP International. “TMP bought us because we were the best in town – the best people, culture, values and earnings.”
The Royal New Zealand Navy is ship of very different size and confronts quite different circumstances but it is experiencing similar upsurge in staff morale from its commitment to world-class programme. RNZN’s vision is to become “the best small nation navy in the world”, says rear admiral Peter McHaffie.
The Navy entered the awards programme this year after almost three years’ i