Car

I specifically appreciate one of the improvements in the new ISO 9001 standard. It requests the Organization to evaluate and improve the effectiveness of its Management System. Not much has been spoken about this improvement of the standard. For some it may be perceived as a detail. But I think this is one of the key elements in how the standard guides you to reach business success with the help of a Management System. The new standard puts the spotlight at you (being the management of the organization). You have to understand the very essence of what a Management System is, understand why you have it and how you can improve Organization success by improving the Management System. Unfortunately, this is a huge challenge to many Organizations. Certainly for those Organizations where the Management System is viewed as a bureaucratic burden and only a necessity to be able make business.

The 2015 version of the ISO 9001 standard explicitly request the organization to evaluate and to improve the effectiveness of the (quality) management system. Why is this a challenge? Effectiveness is about reaching wanted results. Evaluate is about understanding what is good and what is bad. Improve is to do something about it. If we do not know in what way the Management System enables the Organization to reach its results, we cannot know how to improve the effectiveness of the Management System. Simply measuring Organization output will not be enough. We have to measure elements of the Management System that have a traceable impact on the Organization effectiveness.

Let us take a practical example. Think of last year’s sales result. Was it good? Was it good enough? Can you improve it? To what extent are the sales result an effect of internal activities in your Organization? How much did it depend on competitors, market movements, legal changes, technology development, political decisions, etc.? If you did not reach the wanted sales result, how much of this was due to low effectiveness of the Management System? This is really hard to say, unless we add other measurements relevant for Management System effectiveness. Organizations that do not have these kind of measurements do most often not improvements of the correct building blocks of the Management System. They blame others, do nothing at all or does the wrong changes.

Let me use a car to explain the topic of measuring effectiveness. I use my car to travel from my office to visit my customers. The car has to function when I need it. I do not want it to consume too much petrol and I do not want to spend too much time in the car. This is the result I want to achieve using my car. I can measure this and understand if the result has improved over time. Less petrol, shorter travel times, always functioning. But when I evaluate these results, with the aim to improve the car, I do need more information. How can I decrease the consumption of petrol? Is there any seepage? Problem with the engine? Is the catalyst working properly? We need to measure performance of relevant components in the car, if we want to improve effectiveness of using the car.

Let us return to the Organization and its Management System. Organizational effectiveness is possible to measure by its achieved result. Effectiveness of the Management System has to be measured by the result of building blocks of the Management System, viewed in the perspective of the Business Logic. How effective is the Organization Structure? How effective are the Processes? How effective is the Controls? The Business Logic may require you to be fast in business, cheap or present in several countries. What impact do this have on Organization Structure, Processes or Controls? How can we measure the performance of the Management System we have developed? Relevant measurements have to be applied. These measurements should be possible to use when we evaluate the Effectiveness of the Management System. To find these measurements is the challenge! A challenge to take seriously as it may unlock great improvement possibilities in your Organization.

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