Business Maturity Indicator

A Means to Measure the Effectiveness of a Business

No matter what the business is, one that makes products or one that provides services, it can be measured. Many measure their success by the feedback (or satisfaction) from their Customers. This is all well and good if the business is profitable, but having satisfied customers and signs of profit lost is an indicator of problems within. It points to the business not being as effective as it should be. The next questions are "How do we find out our effectiveness and where do we begin". One should start with a framework that establishes Leading Practices a business should have in place to be effective whether they make products or provide services. This is followed by rating internal processes as to their maturity against the Leading Practice Framework.

We use the term "Leading Practice vs Best Practice" as any rating method and system has some level of "subjectiveness" and some "common sense" needs to be applied. The term "Best Practice" tends to infer a specific practice as being the/only way to do something. "Common Sense" tells us that this is not always the case. A majority of companies may be doing a very similar practice the same (Leading) but not exactly the same (Best). This is OK as this is the world we live in. The approach would be to look at a Leading Practice(s) and accept or adjust it to your specific needs. The replacement (if rejected) or accepted/adjusted process then becomes your Best Practice.

This all being said, use a rating system that reflects process maturity and is based on common sense. Also use a rating approach built based on the principle of "Keep It Simple" and can be used in two stages to allow one to "take on" only what they are ready for. The first stage is a self assessment. A self assessment and rating method allows one to get information quickly, effectively and reasonably accurate based on some reasonable assumptions The second stage is a "deep dive". A bit more structured review and rating method that looks at processes in support of a/the framework.

The next part is to answer an obvious next question: "What framework/criteria do we apply the two stages to?" The answer to this is "One that reflects 'what you do' and "'who you are' (your culture if you will)". Years ago, the Deming or Six Sigma frameworks may have been appropriate. Today, ISO (International Organization of Standards) has made great strides in establishing "Business Frameworks" based on Leading Practices. You may also have an internal "standard" framework that can used. If you don't, ISO 9000 is quite appropriate for businesses that make products and/or provide services. If the business is asset intensive and relies heavily on "Maintenance" to operate ( the Rail and Mining industries are two examples), there is ISO 55000 (which was/is based off of 9000).

The frameworks of both of these standards are able to be adapted to any business as they are built upon the principles of Leading Practices. One just needs to apply "what they do" to the ISO 9000 and the "primary maintenance mission/strategy" to the ISO 55000 Frameworks when using the "Self Assessment" or "Deep Dive" rating methods.

Each of the ISO Frameworks have approximately 30 (similar) criteria to rate to. With a Stage 1 Self Assessment, keep it "simple" by having an individual (or small group) rate each of the criteria to one of three choices "1-In Place, 2-Not in Place or 3-Working on It". Using this simple approach allows one to get an initial assessment accomplished quickly, with very little effort. One will acheive a reasonable amount of accuracy based soley on the input from the parties providing the response. Therefore "who" volunteers or is designated to provide input is important in a Stage 1 assessment to gain a very good picture of the businesses effectiveness/maturity. It will also provide clear insight to make a decision if there is a desire to move to Stage 2, a deeper dive rating the business processes across the business (or just focus on some of the "weaker" area).

In an example of a self assessment below, this is a representation of the type of insight one can get with the answers of Stage 1 Self Assessment being translated into color/text coding 1-In Place(Green/Strong) 2-Not in Place (Red/Weak) or 3-Working on It (Yellow/In Process)

In an example of a Stage 1 Self Assessment to an ISO 9000 framework (left), this is a representation of the type of insight one can get with the responses being translated into color/text coding of

1-In Place(green/Strong)

2-Not in Place (red/Weak)

3-Working on It (yellow/In Process)

Just with this level of information alone, one can make an informed decision whether to expend more effort and perform a Stage 2 Deep Dive into the processes covered by the Framework to get a deeper understanding of the effectiveness of the business. This information may be sufficient to make a conscious decision to just focus on the "Weak and "In Process" areas (with an assumption that the results accurately reflect areas that causing issues related to the drop in profit margins).

Looking at this same information using a Pie Chart, one can get a view such as:

This same information presented this way and rounded infers the business has almost 40% of the Framework criteria In Place , 40% In Process, and almost 20% not in place. Giving "credit" to criteria In Process and adding it to those In Place, one can deduce (and make a reasonable "leap") that 80% of criteria are in "good shape" and 20% needs to be addressed.

Using this information (and again making assumptions) one can make another reasonable assumption and deduce the Maturity Indicator is estimated to be somewhere between Evolving and Proficient. Of course, a more accurate rating can be calculated by performing a Stage 2 Deep Dive which uses differnent rating method based on the five Maturity Categories (below) that is applied to the processes in place supporting each of the criteria of the Framework.

Regardless of what framework is used, the intent of this article is to provide the reader with information as well as ideas. Demonstrating by example of how a framework that is aligned (adapted) to the business and two Stages of assessments can be used to measure and understand how effective and mature a business is.

Should you wish to learn more about information in this article, the author would be more than happy to answer any questions.