ACHIEVING BEST PRACTICE
IN YOUR BUSINESS

Ideas for business management

This brochure looks at some of the key characteristics in successful business management.
No matter what their size or industry sector, successful companies have certain management characteristics in common. 
This brochure identifies some of these ideas and, through case studies, aims to help you introduce them to your business. It also contains a list of contact details that you can use to get more information on any of the topics covered in this brochure.
This brochure is for: Any business looking for ideas on how to improve the way it is managed.
It covers: The management ideas of some of BritainÕs successful businesses and how they could be relevant to your business.

Best practice in management

WeÕve spoken to a number of people in different sectors of British businesses and asked them to identify what management practices make a company successful. 
The best practice themes are set out below and then explored in depth in the rest of this brochure.

Throughout weÕve summarised as charts some of the key factors and attributes that were nominated by senior managers as crucial to their success.

Many of the ideas are not new. They are all approaches to breaking down barriers in the way a business works, in order to allow it to move towards sustainable change. All the businesses involved agreed that their ideas werenÕt quick fixes or complete solutions Ð they were the start of journeys. 

Successful businesses:
 
¥	Are led by visionary, inspiring leaders who promote change
	These people communicate a clear vision, and live by a strong set of values that they share with their staff.

¥	Have values that appeal to customers and staff 
	They focus on meeting customer needs Ð operating in a way that lets staff take pride in their business and makes customers happy to buy from them.

¥	Unlock the potential of their people 
	The best businesses develop their employees, making them feel valued and encouraging them to contribute to the business. 

¥	Promote new ideas and ways of working
	They see that future success depends on constant improvement and innovation.

¥	Know their customers 
	They are always looking to learn from their customers and trying to anticipate and respond to their changing demands. 

¥	Try to exceed their customersÕ expectations 
	They place great emphasis on continually improving the quality of the products and services they provide.

The one thing that all of these best practice themes have in common is that they are about people Ð how they think, how they communicate and how they work together.


Vision and leadership

Successful companies are led by visionary, inspiring leaders who promote change


Vision and change begin at the top. It can be an individual, or it can be a team supporting the CEO that champions the continuous change process, but as one contributor observed: ÒThey do not manage change: they are change.Ó 

The need to improve management and leadership is urgent. According to the International Institute of Management Development, the management efficiency of the UK lags behind our major competitors. When questioned, over a third of UK companies admitted to being dissatisfied with the quality of their managers.

From the top, the vision needs to be communicated and shared throughout the organisation. If you donÕt change your people, nothing will change, so you have to make sure everyone understands and supports what you are trying to achieve. 

For many companies, best practice in change management involves putting customer needs at the heart of any change. This gives a clear reason for the changes 
and makes them much more comprehensible and acceptable to employees.

The best businesses also have staff who accept that continuous adaptation to market conditions and customer needs is vital. This means that a successful vision needs to promote not just a set of changes, but the importance of change itself. 

For example, if your business aims to Ôcreate delighted customersÕ as a way of Ôbuilding undisputed worldwide leadership and profitabilityÕ, then your vision needs to explain how you are going to do it and how, in 15 years time, youÕll still be doing it.


Case study
Name of company: The Aroma Company
Sector: Product demonstration technology
Size of firm: 8 employees
Location: Oxfordshire
Website: www.aromaco.co.uk

The Aroma Company showed that transforming a good idea into 
a winning product takes patience, a strong vision and excellent leadership.
When Simon Harrop had an idea for a new product demonstrator, he was determined to see it through to profitability. His brainwave was that it is smell, rather than performance, that is a key factor when people buy products like washing powders, shampoos and deodorants. He saw that retailers would welcome a device that that could reproduce the exact smell of a product and so reduce waste from customers tampering with packaging. 
He produced the Aroma Box which, though it was extremely effective, was deemed far too large for use in supermarkets and not user-friendly enough. Simon was faced with a choice Ð to invest more time and money in getting the product to work or abandon the idea.
Convinced that he was on to something, Simon contacted his regional branch of Business Link to get advice on driving his vision forward. Business Link put him in touch with a product designer to help the company re-engineer the Aroma Box.
Taking a gamble, the Aroma Company, which at the time employed just three people, invested £50,000 in design, tooling and intellectual property rights protection. At the time this was about a third of the businessÕs turnover. 
In place of the unwieldy metal box of old came a mini bellows small enough to clip on to a supermarket shelf. When the customer pressed it, a small whiff of fragrance was released. It could keep going for about eight weeks Ð the average length of in-store promotions. 
The tiny, ingenious device caught on immediately. Initially used to promote air fresheners, it has since been applied to a wide range of products, filling the aisles of all the major UK supermarkets with the whiff of perfumes, shampoos, deodorants and even coffee.
The companyÕs turnover doubled in each of the next two years, staff numbers increased and the company now has customers all over the world. 
Simon has some advice for small businesses who have a big idea but are running into difficulties: ÒKeep believing in it. If itÕs a good idea, the chances are that itÕs worth the extra investment of external design. But if you donÕt have spare cash to throw around, youÕll need a steady nerve.Ó


Values and society

Successful companies have values that appeal to customers and staff

In recent years, a concern has appeared in surveys of staff and customer satisfaction: a desire for ÔethicalÕ or ÔresponsibleÕ behaviour. The value of the brand and a good reputation hasnÕt changed, but the way people form judgements about businesses has. Increasingly people want to work for, or to buy from, businesses that are good not only to them, but to others and to society as a whole.

Many companies now produce corporate social responsibility (CSR) reports alongside their other statutory reports. The best are going further though, and developing policies that take account of their social and environmental impact. These policies can range from switching to sustainable paper suppliers and supporting voluntary and charitable work, through to redesigning the entire production process to reduce the environmental impact.

One estimate suggests that small businesses alone make a social contribution worth up to £3bn a year. With many large companies adopting ethical codes of practice and demanding the same of their suppliers, this figure is likely to grow.

There is a lot of discussion about just how far CSR can and should go, but there are two very strong reasons why good businesses have a CSR policy:

¥	It improves staff morale Ð employees like to feel good about the business they work for. If they do, they can become enormously powerful advocates for it.
¥	It matters to customers Ð a survey by MORI showed that three-quarters of the British population say that more information on companiesÕ social and ethical behaviour would influence their buying habits.

Case study
Name of company: BT
Sector: Telecommunications
Size of firm: 105,000 employees
Location: Nationwide
Website: www.groupbt.com/betterworld

BT takes CSR seriously, and its findings support the business case as well as the social benefits.
Keen to show itself as a good corporate citizen, BT was an early adopter of CSR. It saw that it could give something back to the community and, at the same time, help dispel its image as a large, monolithic corporation. 
One of its BT largest investments has been the £8.5m it committed to the BT Education Programme. The scheme, which is free and supports the national curriculum, will involve more than two million school children in drama presentations and communication skills workshops to bring the themes of good communication and citizenship to life.
The programmeÕs educational roadshows have already visited 5,500 of the UKÕs 28,000 schools Ð touring 20 schools a day during term time.
In addition, BT is backing a volunteer programme, running awards for teachers, and providing schools with educational support materials including videos, a CD-Rom, and a website.
BT sees a number of benefits from this social investment programme, which fits with its wider business objectives. The Ôlocal BTÕ element is especially important Ð regional public relations from the school visit have proved to be an excellent way to establish the company as a responsible member of the communities in which it works.
Pinning down the commercial benefits of a social investment programme is always difficult. To help tackle this problem, BT has pioneered research into the impact of such factors on customer satisfaction levels, which are critical to its success as a business. The work concluded that BTÕs overall image and reputation is a Ômajor determinant of customer satisfactionÕ and is considerably more important than other factors, such as how customers feel about the billing process or the cost of calls and rental charges relative to those of its competitors. As such, the CSR activities have proved to be an excellent investment as well as a valuable gift to schools.
Judy Kuszewski and Kavita Prakash-Mani of SustainAbility, the corporate responsibility and sustainable development business consultancy say: ÒCompanies that aim to take a CSR leadership position such as BT have a vital role in sharing good practice, tools and knowledge.Ó


Involving and 
   developing staff
For the businesses we spoke to, creating the right culture starts from a single premise: itÕs our people that make things happen.

There are four aspects to involving and developing staff: motivation, development, communication and organisational change

1 Motivation
Managers in the most successful companies told us that getting the best out of their staff is a priority. As one MD puts it: ÒMotivated staff will be ten times more productive than unmotivated staff.Ó Another said: ÒWhen a customer meets an employee he meets the whole organisation and often judges the whole on that basis.Ó

This highlights the two aims that form part of best practice in people management:
¥	making each employee feel that they are valued and have a degree of autonomy
¥	helping employees to identify with customers. 

2 Development
The best companies are passionate about developing their staff and unlocking their potential. Some reported that as much as 10% of employeesÕ time was spent on it and others described it as the Õthe epicentre of empowermentÕ and Ôa competitive weaponÕ. 

The companies that put most emphasis on training and development are also the most rigorous about it. Best practice is to make sure that development is properly targeted Ð that it has a defined set of objectives, it is measurable and that it is put in the context of improving the service that customers receive.

The companies also reported that the best results emerge when employees understand the value that training can have for them professionally. This doesnÕt mean, however, that training is only about formal training courses. The best organisations find a balance of formal and on-the-job training is essential to raise skill levels. 

3 Communication
As well as giving people the tools to do their jobs better, improved communications are a powerful way of helping employees feel valued at work. Successful businesses use a mix of routes Ð team briefings, newsletters etc Ð and encourage feedback. The thinking is that the more you encourage communication, the more you can break down the ÔthemÕ and ÔusÕ culture.

4 Organisational changes 
In some businesses there are as few as three levels within the organisation: directors, managers and people. This isnÕt the result of cost cutting or stripping out middle management, but a deliberate effort to focus everyone in the business on what customers need, rather than on the demands of bureaucracy.

As a result, the whole structure of many businesses has changed. For example, seniority, and its rewards, no longer comes with length of service but as a result of experience and knowledge. 

These organisational trends are shown in the diagram opposite, which highlights the different factors that are transforming businesses.


Successful companies unlock the potential of their people


Case study
Name of company: Fracino
Sector: Manufacturing
Size of firm: 14
Location: Birmingham
Website: www.fracino.co.uk

By getting designers, engineers and marketers working together, Fracino has been able to establish itself in a very competitive market.
When, in the 1990s, coffee drinking in many European and North American cities advanced from being an unremarkable, everyday habit to the epitome of style, the Fracino team set out to produce a range of coffee machines. They aimed to supply the host of small businesses, which were suddenly competing with the multinational chains.
Being a relatively small company, Fracino had no immediate hope of usurping the large volume industrial roasting companies at one end of the scale or the low-end domestic mass producers at the other. So it targeted the gap between the two. 
Company founder Frank Maxwell and his close knit company developed a new method of fresh-roasting the beans in a glass chamber which was visually appealing and produced a great aroma. Frank saw that the ÔRoastilinoÕ machine could become a dramatic centrepiece for cafŽs Ð which emphasised the experience as much as the drink. 
To break into a competitive market, the company realised it needed a perfect blend of form and function. Maxwell decided he wanted to create project teams of designers, engineers and marketers who could work together at all stages of the process to assure the quality of the final project. Now, a three or four-strong team sees each project from original concept, through prototyping and testing, to component supply and assembly. This creates real dedication and focus and means that modifications can be made quickly and seamlessly. 
The company also involves a group of customers in the prototyping phase to make sure the final product meets their needs.
The result has been a range of products that have proved a great success at home and abroad. Fracino machines are being installed nationwide in one of the major UK coffee shops and the company has a comprehensive export programme to 12 countries. In addition, the ÔRoastilinoÕ machine went on to win a Design Council Millennium Product award and gave Fracino a reputation within the trade for innovation as well as quality. 
Angela Maxwell, daughter of Frank and an employee of Fracino, admits that the company struggled at first with exports. ÒExporting is seriously hard work Ð you have to put up with many disappointments,Ó she says. However, the Millennium Product award in 2000 proved a milestone. ÒAfter receiving the award, doors began to open,Ó she says.
The ways of working that Fracino adopted werenÕt just geared for short term success: they were intended to keep the company ahead of the game by generating a stream of exciting products. As Angela says, to stay competitive, the company has had to adopt a policy of continuous improvement.


Innovation and growth

Successful businesses promote new ideas and new ways of working

Innovation is no longer regarded as something intangible. The best businesses are measuring and targeting product innovation as they would any other business process. One manufacturer, for example, has a goal of generating 80% of its sales from products that are less than five years old. 

Increasingly businesses are also interpreting ÔinnovationÕ much more widely. It used to be narrowly associated with R&D, but now itÕs taken as a measure of the ability of all aspects of a company to improve the way they work. New ideas are encouraged and sought in every area, from production and administration through to customer service and after sales support. 

As companies rationalise their own operations, they are also looking to their suppliers for further improvements. Many of the examples of best practice that weÕve seen have involved using new technologies to share information with suppliers to improve forecasting, cut stock holdings and cut administrative costs.

The other major trend weÕve seen has been 
a degree of caution about rapid expansion and new ventures. Having taken time to understand their customers and their markets, many businesses are instead opting for organic growth and strategic partnerships. 

Benchmark your business
Use DTIÕs Innovation GroupÕs self-assessment tool at www.innovation.gov.uk


Learning from customers

Successful businesses know their customers

A recurring theme with best practice businesses is not that they have all the answers, but that they recognise the need to keep learning.

Customers are one obvious source of ideas for new products and services but they can also be used to benchmark other aspects of performance against your competitors. Contact with suppliers, meanwhile, can provide process ideas as well as more direct product information. 

Many businesses welcome visits to their premises, because conducting tours and responding to questions generates feedback and free advice. Similarly, visits to other businesses, even those in different sectors, can be a useful stimulus for lateral thinking. 

While businesses have to be self-motivated, most regard customers as the people who keep them on their toes. Successful businesses see customersÕ raised expectations and demands for lower prices as an opportunity Ð something to drive them on and become more competitive. Many take it for granted that they have to know their customer and their customerÕs market place better than the customer themselves. 

Benchmark your business
Measure your Quality, Cost and Delivery in order to get things right, first time, more often Ð download our QCD brochure from www.dti.gov.uk/bestpractice or order it 
from the DTI publications orderline on 0870 150 2500 (URN 04/814).

Case study
Name of company: Gecko Headgear
Sector: Extreme sports equipment manufacturing
Size of firm: 8 employees
Location: Cornwall
Website: www.geckoheadgear.co.uk

Gecko realised it could sell its lightweight headgear to many markets, but made sure the detail on each product was just right.
Jeff Sacree turned his small, struggling, surfboard business into one of EuropeÕs leading specialist helmet manufacturers on the basis of a casual conversation. His business was extremely seasonal so he was looking to find a way of diversifying his products. Speaking to a lifeboatman, he found the RNLI needed a lighter, rustproof helmet for use on the seas. He had been working on a similar helmet for surfers and so was well placed to supply the RNLI. 
With a big win like the RNLI under his belt, the question for Sacree was where to take the business next.
Some potential markets sprang to mind immediately: specialist helmets could be usefully worn by river police, coastguard and customs officers Ð and a recent model has been designed specifically for helicopter winchmen. But, as the craze for new, extreme sports blossomed throughout the 1990s, a much wider market suddenly presented itself. Skateboarders, snowboarders, mountain bikers and powerboat racers all needed protection. 
Prototype headgear was produced, tested and modified for each discipline, and users were encouraged to respond with comments and suggested improvements. 
Gecko soon discovered that producing low-volume, handmade products was a distinct advantage when it comes to satisfying the niche markets of extreme sports. It involved less financial risk and allowed for the continual, minor improvements that customers wanted. 
ÒMaking everything by hand gives us the crucial advantage of flexibility, so we can add altimeters and video cameras, torches and two-way radio systems Ð pretty well anything a customer asks for,Ó says manager Dean Bunker.
Today, the Gecko trademark can be found in 15 European countries, stamped on between five and six thousand helmets a year. The basic models retail at £60-£100 a time, with heavily customised versions at two or three times that price. 
The RNLI helmet won a Design Council Millennium Product award and now the orders flow in all year round, removing the companyÕs dependence on the summer trade.
Dean Bunker recalls an early image problem: ÒAt the outset, it wasnÕt regarded as cool for daredevil sportsmen to wear helmets. We had to make young people feel good wearing them Ð and that involved a bit of a culture change.Ó 
How did the business over come this? By sponsoring local powerboat and surfing champions to create positive brand associations. 
Jeff Sacree is pleased with the businessÕs progress, but he doesnÕt get complacent. ÒWe keep looking at designs to see if we can improve them. We never stop exploring new avenues to create the ultimate product.Ó


Improving quality

Successful businesses try to exceed their customersÕ expectations

For most businesses this is about more than price cuts. One business said its strategy was to improve: ÒQuality, delivery and then price, in that order.Ó Another business identified service as the key differentiator in an organisationÕs competitiveness. (ÒThe only competitive advantage that companies like ours have over the Far East is service.Ó) 

Other businesses said simply that quality, 
low cost, performance and delivery time are no longer sufficient in themselves: they are the basics that any firm must offer if it is to survive in the market. 

The businesses all agreed that innovative, customised products and services, supported by marketing and design, are the differentiators that allow companies to succeed. This was summed up simply by one senior executive: ÒIf the product is right, and you deliver what your customer wants, the world is your oyster.Ó

Case study
Name of company: Boa UK
Sector: Kitchenware
Location: Croydon
Website: www.boahousewares.com

By listening to customersÕ needs, Boa UK realised that there was an untapped demand for a new type of kitchen knife.
Brian Alexander invented the Constrictor, a gadget for removing stiff jar lids. In five years, he sold £20m worth of Constrictors, which were made in a knife factory that he had bought for its manufacturing capabilities. When looking at how to build the business, he realised that the company had a lot of residual knowledge about the knife business that he could use to launch a new range.
Having lived abroad, Brian knew that high-end British-made products still attracted a premium. By talking to people in the kitchenware industry, he also established that there was a demand for quality lifestyle goods at a reasonable price. ÒWe looked at our competitors and realised nothing new had appeared on the market for quite a while,Ó says Brian. ÒMost knives are shoddily made, with handles that are stuck on later. The quality of finish was generally very bad.Ó 
Hiring award-winning designer Paul Priestman, the business invested £750,000 in equipment and design to create an innovative set of products. This included a range of luxuriously packaged kitchen knives and knife blocks.
Boa Housewares has managed to establish itself in its target markets. Around 80% of its sales come from countries outside the UK Ð predominantly the US, Japan, Germany and France Ð and the company has a two-year target of £6 million in export revenues. 
The continual process of refinement and testing won the business a series of design awards and an enthusiastic client base. Like the original product concept, this process of refinement comes out of its close knowledge of customer needs. For example, it found some customers, especially single women, felt uncomfortable having a knife block because it might present a weapon to an intruder. Acting on this, Boa created a chopping board with an in-built knife drawer to store knives out of sight. 
The downside of getting it right, is the time and money it costs. The ÔclamshellÕ knife block, which is one of BoaÕs most popular products, wasnÕt arrived at overnight. Explains Paul: ÒThe clamshell took months. We had to keep on telling Brian that we just werenÕt there yet with the knife blocks. In the end the idea came from a brainstorming session. It was a classic piece of teamwork.Ó Boa was rewarded in its persistence by a Design Week Consumer Product of the Year award. 
Brian is convinced that Boa will have to continue to innovate in order to outrun the competition. ÒWeÕve had to sacrifice a lot,Ó he says, Òbut risk is fun.Ó


Study methodology

The views and tables in this document are drawn from interviews with senior executives in 121 UK-based businesses. The final selection of companies was made 
to ensure a degree of balance between the manufacturing and service sectors, region and size.

The DTI gratefully acknowledges, the help of the businesses who participated so willingly in this study 


Further help and advice

Achieving best practice in your business is a key theme within DTIÕs approach to business support, providing ideas and insights into how to improve performance across your business. By showing what works in other businesses, we can help you see which approaches can help you, and then support you in implementation.

Achieving best practice
in your business
To access free information and publications on best practice:
¥	visit our website at www.dti.gov.uk/bestpractice
¥	call the DTI Publications Orderline on 0870 150 2500 or visit the website at www.dti.gov.uk/publications.

Support to implement 
best business practice
To get help bringing best practice to your business, contact Business Link Ð the national business advice service. Backed by the DTI, Business Link is an easy-to-use business support and information service, which can put you in touch with one of its network of experienced business advisers.
¥	Visit the Business Link website at www.businesslink.gov.uk
¥	Call Business Link on 0845 600 9 006.



General management information
The DTI best practice website at www.dti.gov.uk/bestpractice contains a whole range of valuable help and advice on management best practice. This includes case studies and guidance on subjects like Quality, Cost and Delivery (QCD) measures, quality management and improving forecasting with suppliers.

Other USEFUL websites
www.innovation.gov.uk
DTIÕs Innovation GroupÕs website contains a self-assessment tool for businesses of critical success factors. 

www.mas.dti.gov.uk/home.jsp
The Manufacturing Advisory Service

www.envirowise.gov.uk
Envirowise, a government-funded programme offering free, independent advice on practical ways to minimise waste and increase profit 

www.bestcompanies.co.uk
For more information on the Sunday Times 
100 Best Companies to Work For list.

www.bitc.org.uk
Business in the Community works with companies to improve the positive impact of business in society.


GENERAL BUSINESS ADVICE
You can also get a range of general business advice from the following organisations:

England
¥	Call Business Link on 0845 600 9 006
¥	Visit the website at www.businesslink.gov.uk
Scotland
¥	Call Business Gateway on 0845 609 6611
¥	Visit the website at www.bgateway.com
Wales
¥	Call Business Eye/Llygad Busnes on 
08457 96 97 98
¥	Visit the website at www.businesseye.org.uk
Northern Ireland
¥	Call Invest Northern Ireland on 028 9023 9090
¥	Visit the website at www.investni.com


Published by the Department of Trade and Industry. www.dti.gov.uk
© Crown Copyright. URN 04/810; 04/04