Assessment of the interaction between the Business

Excellence Model and the Lean Enterprise Model

Introduction

In 1991, the European Foundation for Quality Management

developed the European Model for Total Quality or as it was named

later, the Business Excellence Model (BEM) as a management

framework for improving business performance. At the same time,

in the USA, the military aircraft industry was developing its own

approach to business performance improvement, the Lean

Enterprise Model (LEM)1. The LEM, or Lean model, was introduced

to the British military aircraft manufacturers in 1998 by the UK

Lean Aerospace Initiative (UK LAI), an initiative analogous to the

original US LAI.

One of the UK LAI’s concerns is to explore the role that LEM can

play for the British military aircraft industry. Since other models

have been implemented before, it is important to identify the

interaction that the Lean model could have with them. The EFQM

model is one of the models that could possibly co-exist with the

LEM in the future.

This thesis is an effort of exploring this interaction and it is focused

on the identification, assessment and analysis of the interaction if

the two models were to be implemented in parallel, within the same

management framework. The thesis objectives are focused on four

main directions:

1. To produce a comparative study of the two models’ structures

2. To produce an analytical study of the two models interaction

3. To identify the characteristics of a framework on which a

company could implement the two models in parallel

1 LEM is a copyright of the Massachusetts Institute of Technology (MIT)

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4. To suggest improvements for the parallel implementation process

The benefits for an organisation having a framework for

implementing both models in parallel are that it would acquire a

better understanding of the models’ interaction and therefore it

would be able to implement them quicker and with less conflicts or

duplications of activities. Moreover, the two models’ synergies

could produce superior results. The implementation could also be

more economical since only one team will be needed for carrying it

out.

The Lean Enterprise Model

The LEM is the systematic framework for organising the findings of

the US LAI’s research. It provides a codification of Lean principles

and practices, as well as the basis for integrating them within a

framework that makes their relationships readily apparent.

The model comprises six principles, twelve overarching practices

and a number of metrics. The basic framework for the

implementation of the model is its twelve practices:

1. Identify and optimise enterprise flow

2. Assure seamless information flow

3. Optimise capability and utilisation of people

4. Make decisions at lowest possible level

5. Implement integrated product and process development

6. Develop relationships based on mutual trust and commitment

7. Continuously focus on the customer

8. Promote Lean Leadership at all levels

9. Maintain challenge of existing processes

10. Nurture a learning environment

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11. Ensure process capability and maturation

12. Maximise stability in a changing environment

An organisation can implement the LEM by following the directions

highlighted from the above practices therefore the practices are, in

a way, the enablers of the Lean model.

The LEM has four basic functions. It can be used as:

A Manufacturing Management Tool. It provides the

directions for managing the manufacturing aspects of the

organisation

Strategic Direction Tool. It is used for identifying strategic

directions for developing the organisation’s business policies

and strategies

An Inside-Looking Management Framework. It provides a

framework to the management team for identifying the

organisation’s processes and functions

A Performance Measurement Tool. It provides the metrics

for measuring the organisational performance

The industrial paradigm: British Aerospace Plc

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The Military Aircraft & Aerostructures (MA&A) company of BAe Plc

is currently the only UK manufacturer implementing the EFQM

model and the LEM in parallel, within the same management

framework. MA&A carried out a study concerning the relationship

between the two models. The strongest connection identified was

between the LEM practices and the criteria of Processes and

Partnerships & Resources. The Lean practices having the highest

impact on the BEM were to maintain challenge of existing

processes, to promote Lean leadership, to develop relationships

base on mutual trust and commitment and to implement integrated

product and process development.

In the MA&A approach it is highlighted that the EFQM model

adopts a generic approach whereas the LEM is more manufacturing

focused. The BAe experience shows how the models can co-exist

within the same management framework with the LEM as a

manufacturing management and strategic direction tool and the

BEM as a self-assessment tool.

Method of approach

Business models, unlike the mathematical models, cannot be

compared in a precise, quantitative way. The comparison can only

be carried out through a qualitative method that inevitably is

biased by the author’s perspective. Nevertheless, this method can

still produce results that are indicative of the models’ interaction.

The implementation of the models affects the organisational

management activities therefore an estimation of how the models

change the management activities provides a basis for assessing

their interaction. The first step for identifying this interaction is to

compare the models’ structures in order to find the common areas

of activities that they affect.

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The structural comparison is followed by an interaction analysis

and an assessment that is carried out through two perspectives.

One looks at how the implementation of the LEM could affect a

management environment of business excellence. The other

perspective considers how the satisfaction of the business

excellence criteria could affect the parallel implementation of the

Lean model.

The structural differences of the models

The EFQM model has a structure that could be described as

“horizontal”, with two equal parts, the enablers and the results

having the same overall weight of 50%.

The Lean model’s structure is hierarchical, comprising different

levels of information. At the top level, the principles and level

metrics summarise the philosophy underpinning the model. At the

bottom level of the structure stand the overarching practices as the

means for implementing the LEM principles. The overarching

practices are the enablers of the LEM and their implementation

results are measured by the detailed metrics.

Table 1. Differences between the Business Excellence

Model and the Lean Enterprise Model

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Business Excellence

Model

Lean Enterprise

Model

“Horizontal”, balanced

structure

Hierarchical structure

The weight of importance is

balanced between the

enablers and the results

There is no evaluation

between the elements of the

model

Affects possibly all areas of

activities including issues

such as Environmental or

H&S Management

Affects mainly the strategic,

manufacturing and human

resources management

areas

Approach is based on five

enablers and four results

criteria and 32 sub-criteria

and gives general directions

therefore is not very detailed

Approach is based on 12

overarching practices and

64 supporting practices and

as a result is more detailed

than BEM

There is direct connection

between the business

enablers and their results

There is no direct

connection between the

practices and their results

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Common scope of the models

A parallel implementation of the two models may cause conflicts

and confrontations, therefore it is wise for the implementers first to

speculate and measure the models’ interaction and then proceed

into actions.

Figure 1. Structural comparison of the EFQM model and

the Lean model

In the above figure is illustrated the way that the two models affect

the organisation’s management activities. The models are placed in

parallel so that their similarities are visible.

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The BEM’s enablers criteria and the LEM’s principles define the

general directions that the strategic management should be aligned

with. At a lower and more detailed level, the BEM’s enablers sub-

criteria and the Lean model’s overarching practices provide a more

detailed orientation of what an organisation should do. The results

are assessed against the BEM’s results criteria whereas in the LEM

the performance is measured by the Lean metrics.

Area of comparison

The enablers sub-criteria are the part of the EFQM model that

affects the organisation’s management activities in a way similar to

the Lean overarching practices. The implementation of the Lean

model is carried out through the implementation of the Lean

practices. The BEM implementation is based on following the

directions that the enablers sub-criteria highlight. Therefore, the

activities that derive from the implementation of the Lean practices

and the satisfaction of the BEM enablers sub-criteria, define a wide

area of interaction between the BEM and the LEM.

The thesis is focused on the interaction between the LEM practices

and the BEM enablers sub-criteria because this interaction is

happening at an operational level. Other interactions between the

different levels of the models exist, as it is visible at figure 1, but do

not directly affect the parallel implementation.

The interaction analysis

The organisation, for the implementation of the two models,

undertakes some activities and actions in order to satisfy the

models’ requirements. On this basis, when the two models are

implemented in parallel they interact in four different ways and the

author assesses the interaction by allocating a grade from 0 to 3.

The assessment allocates arithmetical figures that reflect impact

estimations and not mathematical results.

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The estimations are based on the logic of how the implementation

of a LEM practice affects the implementation of the BEM sub-

criteria and to which extent it satisfies their requirements.

Moreover, the effect of how the business excellence culture affects

the implementation of the Lean practices is examined.

When the two models share the same activities then the

relationship has an “impact 3”. An example could be activities

related to an employee-training scheme where both models could

support such activities.

When they share some activities and/or activities of the one model

support the implementation of the other, the relationship has an

“impact 2”. An example is when an activity initiated from BEM, like

leaders supporting and communicating with the organisation’s

people, assists the activities (caused by the Lean practice) of

developing relationships based on trust and commitment.

When the activities caused by the one model support the activities

that satisfy the other model then the relationship has an “impact 1”.

An example would be the assurance of information flow (in the

LEM) and how this is supportive to the design of the organisational

processes as this is defined in BEM.

Types of relationship Impact

Strong direct link 3

Some direct and/or indirect link 2

Indirect link 1

No connection 0

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Interaction in Leadership

The interaction between the two models relevant to leadership

aspects is presented in table 2. The subtotals’ column is the impact

of the LEM practices on the BEM sub-criteria. The subtotals’ row is

the impact of the BEM criterion on the Lean practices.

Table 2. Interaction analysis between the leadership sub-

criteria and the Lean overarching practices

Lean Enterprise Model overarching practices

BEM

1 2 3 4 5 6 7 8 9 10 11 12 SUB-TOTALS

1a 2 2 1 51b 1 1 3 2 2 91c 1 1 2 41d 2 2

SUB-TOTAL

S 0 0 0 1 3 3 1 7 3 2 0 020

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The strongest interaction between the two models occurs at the

implementation of the management system and the involvement of

the leaders in its development.

The strongest impact of the BEM on the LEM is at the promotion of

the Lean leadership at all levels (practice 8).

Interaction in Policy & Strategy

The implementation of the Lean practices satisfies to a large extent

the requirements of the EFQM model of developing the policy and

strategy based on the customers needs and expectations, on

research and performance measurements and building the policy

and strategy around the organisation’s key processes.

Table 3. The interaction between the Policy & Strategy

criterion and the Lean practices

Lean Enterprise Model overarching practices

BEM

1 2 3 4 5 6 7 8 9 10 11 12 SUB-TOTAL

S2a 1 3 3 7

2b 2 1 3 2 8

2c 2 1 2 5

2d 2 3 1 3 9

2e 1 2 1 4

SUB-TOTAL

S 2 3 0 1 3 1 6 2 5 2 3 5 33

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Interaction in People

In the illustration of the models’ interaction in table 4, it is clear

that the LEM has a higher impact on the two first sub-criteria that

relate to the people’s competencies and capabilities.

Table 4. Interaction between the people sub-criteria and

the Lean practices

Lean Enterprise Model overarching practices

BEM

1 2 3 4 5 6 7 8 9 10 11 12 SUB-TOTALS

3a 3 1 1 2 73b 3 2 2 1 83c 3 1 43d 2 2 43e 2 2 4

SUB-TOTAL

S 0 0 0 3 4 4 0 1 0 4 0 5

27

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The Lean model does not make any reference of the relationships

between the organisation and its people. Therefore, it can cover only

part of the BEM’s requirements. Lean manufacturing is a very

demanding manufacturing system. Working with minimum

inventories, continuously striving for perfection and fixing problems

immediately as they occur are concepts that European workers are

not familiar with.

The approach of the EFQM towards the organisation’s people

comprises concerns about the people and their relationship with

the company. Therefore, it is more holistic and covers the needs of

the European business in a more complete and satisfactory way

than the LEM.

Interaction in Partnerships & Resources

The overall impact of the LEM on the EFQM criterion is high with

its peak point at the Partnerships sub-criterion.

Table 5. Interaction between the Partnerships &

Resources sub-criteria and the Lean practices

Lean Enterprise Model overarching practices

BEM

1 2 3 4 5 6 7 8 9 10 11 12 SUB-TOTALS

4a 2 2 1 3 2 1 1 12

4b 2 1 1 2 2 8

4c 3 2 2 7

4d 1 2 3 6

4e 3 2 1 1 7

SUB-TOTAL

S 7 6 1 0 4 3 0 2 2 2 7 6 40

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The implementation of the Lean practices can cover most of the

BEM’s requirements. The LEM provides more directions than BEM

on how to manage the organisation’s partnerships and emphasises

on the importance of the information management. Nevertheless,

the systematic separation of different resources (information,

finance, assets, technology and suppliers) in BEM, provides a

framework for a better understanding and planning.

Interaction in Processes

The illustration of the relationship between the BEM Processes

criterion and the Lean practices in table 6 highlights the highest

interaction between the two models.

The highest impact of the LEM on the BEM criterion is on the

designing and managing of the organisation’s processes. Also, a

high impact exists in the area of satisfying the customers needs and

expectations. The LEM practices that have the strongest

relationship with the EFQM criterion are the implementation of

IPPD and the focus on the customer.

Table 6. Interaction between the Processes sub-criteria

and the Lean practices

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Lean Enterprise Model overarching practices

BEM

1 2 3 4 5 6 7 8 9 10 11 12SUB-TOTAL

5a 2 1 2 3 1 2 3 14

5b 1 1 3 2 7

5c 1 2 3 3 9

5d 2 1 2 1 6

5e 1 3 2 6

SUB-TOTAL 3 3 1 2 7 3 7 2 3 2 5 4 42

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The Lean metrics in the Business Excellence Model

The Lean metrics is a measuring tool of the organisation’s

performance against specified business indicators such as product

development cycle time or number of organisational levels. These

indicators are directly connected with the Lean overarching

practices. For example, the number of the organisational levels

measures the company’s performance of promoting Lean leadership

at all levels. The results of the performance measurement can be

assessed against the performance targets set by the company and

against the performance of other companies through

benchmarking.

A possible disadvantage of the LEM is the insufficient connection of

the Lean metrics with the Lean principles. The performance

measurement is not linked with the organisational strategic

orientation but only with the Lean practices.

The EFQM model is developed on a different structure that links

the performance results with the enablers and therefore, provides

the scope for reviewing the results and developing the policy and

strategy according to them. The Lean metrics could be embedded

in the organisational self-assessment process as detailed measures

of specific business areas.

The Lean metrics are connected mostly with the internal

performance indicators and the customer related performance

indicators. There is a weak link with the people results and there is

no link at all with the society results.

Conclusions of the interaction between the BEM and the

LEM

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Both models aim at the same target, the business performance

improvement. Nevertheless, the BEM comprises aspects that are

not covered by the LEM like people recognition, effective

leadership or impact on society. LEM focuses its attention on the

processes, the value delivered by the company, the information

circulation and the flow of both information and value.

The EFQM model could constitute an overall management

framework, comprising all the organisational business aspects. The

LEM could define the part of this framework that emphasises on

the organisational processes and the value chain that they define.

Both models could be used as strategic direction tools. The BEM’s

advantage is that the enablers-results structure assists the process

of developing the policies and strategies based on the performance

results. Nevertheless, it does not offer any specific strategic

directions. The LEM is more specific in providing strategic

orientation to the company but its main disadvantage is that there

is no systematic connection between the model’s principles and the

organisation’s performance results. Therefore, the synergy between

the LEM and the BEM could partly cover the company’s strategic

management.

It is arguable whether models with such generic features can define

the strategic directions of a company, since these directions depend

on changing factors that a model cannot always cover.

Nevertheless, the BEM and the LEM can imply general directions

for the organisation’s policies and strategies because these

directions are the result of intense industrial information gathering

and they reflect current industrial needs.

The cumulative results of the interaction analysis are illustrated in

the following table.

Table 7. Total results of the interaction analysis

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Lean Enterprise Model Practices

BEM Criteria

1 2 3 4 5 6 7 8 9 10 11 12Total

Leadership 1 3 3 1 7 3 2 20

Policy & Strategy 2 3 1 3 1 6 2 5 2 3 5 33

People 6 3 4 4 1 4 5 27

Partnerships & Resources 7 6 1 4 3 2 2 2 7 6 40

Processes 3 3 1 2 7 3 7 2 3 2 5 4 42

Total 12 12 8 7 21 14 14 14 13 12 15 20

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By examining table 7 it is easy to observe that the LEM’s impact is

not equally distributed among the business excellence enablers.

The enabler that seems to be most affected by the implementation

of the LEM is the processes’ enabler whereas the least affected is

leadership. Nevertheless, an adjustment should be made. All the

numbers representing the impact of LEM practices on the BEM

criteria are multiplied by the overall weight of each criterion in the

BEM. This is done in order to assess the overall impact that the

LEM practices have on the EFQM model. The adjusted impact

factors would be:

Leadership:20 x 1.0

=20

Policy & Strategy:33 x 0.8

=27

People:27 x 0.9

=24

Partnerships & Resources:

40 x 0.9

=36

Processes:42 x 1.4

=59

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Lean impact on the business excellence criteria

From the results it is evident that the Lean practices’ application

has the highest impact on the Processes enabler. That result is

expected, since the LEM is a process-focused model.

The second highest impact of the Lean model on the BEM enablers

appears in the Partnerships & Resources criterion. This impact is

caused mainly by the importance that both models allocate to the

organisation’s partners.

The least impact of the LEM is on the leadership criterion, followed

by the people criterion. The Lean model does not give directions of

what the organisation’s leadership should do. Although the

implementation of the model is underpinned by the use of “middle-

low” leaders, the model itself does not describe the way that these

leaders should serve the company. The implementation of LEM

cannot cover all of the BEM requirements.

The LEM looks at the people as part of the organisation’s value

chain. The BEM’s approach to people emphasises not only on the

use of people’s abilities but also on the communication with the

people and on their satisfaction. Like in the leadership criterion,

the BEM criterion of people covers the Lean practices and enforces

the implementation of the LEM.

Business excellence impact on the Lean practices

The strongest impact that the BEM has on the LEM is on the

implementation of the integrated product and process development

and the maximisation of the operations’ stability in a changing

environment.

The least impact of the BEM on the Lean practices is in optimising

the capability and utilisation of people and in making decisions at

the lowest possible level.

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The parallel implementation: Lean excellence

The initial mixing of the BEM and the LEM could cause frustration

and confusion. Then the organisation could get into a phase where

the models are better understood and are used in a separate, not

conflicting way. Finally the organisation might start integrating

them in a holistic approach. In that case it implements the best

features of the two models while it uses elements of other models

too that suit the organisational needs, in order to serve the

company’s needs. The Lean model could offer a company the focus

that the BEM lacks, and the BEM could offer the framework for an

overall organisational view and a basis for self-assessment that it

cannot be provided by LEM.

The LEM could initiate activities that satisfy the BEM’s

requirements and therefore the Lean model could be a method of

approach for satisfying the BEM requirements.

A potential danger for a company implementing the models in

parallel is to perform activities that satisfy only the Lean model.

The implementation of LEM is a route-map for the organisation that

shows the way to improvement and perfection. The BEM is a

powerful tool that shows where the organisation stands on this

map. Nevertheless, LEM covers only part of the EFQM criteria

requirements so it cannot be a complete map towards perfection.

The BEM can highlight the weaknesses as well as the strong points

that stem from the implementation of the Lean model.

The full implementation of both models in parallel covers possibly

all the areas of activities that an organisation has. Nevertheless, in

the author’s opinion they cannot cover the link between the

strategic decision level and the performance results. The BEM is

very general and does not provide specific strategic directions

whereas the LEM structure does not clearly link the results with

the strategic planning.

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Suggestions for future developments

This thesis examined only the theoretical aspects of the two models’

interaction. A more systematic analysis would comprise

implementation data from companies. For the moment only BAe has

provided this kind of information therefore it is impossible to reach

objective conclusions about the actual parallel implementation of

the models in the UK military aircraft industry.

At this stage the UK LAI is gathering information for identifying

which are the important aspects of a European Lean model. It is a

remit of the UK LAI project (Society of British Aerospace

Companies SBAC) that the LEM be reviewed and updated. These

changes are likely to be discussed with MIT and the US LAI

program and hopefully a united, improved LEM will emerge.

The EFQM model is the codification of information collected from

many different organisations around Europe. Therefore, its criteria

highlight the most important business aspects of European

companies. The future UK LAI could benefit by these findings and

form a reference document that could be built around the US LEM

but could also encompass all these important business aspects.

From the EFQM model point of view, the implementation of the

Lean model justifies the anticipation of many management

professionals that the Lean philosophy will expand to the European

businesses sooner or later. Therefore, it is high time for estimating

the effects that the LEM will have on the European management

culture. The BEM comprises general aspects of business so it would

be possible to embed some of the Lean aspects in the future. The

EFQM model always strives for being up to date with the European

management developments and evolutions. If Lean is one of these

evolutions maybe the BEM should be adjusted.

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