- Continuous Improvement Vs Process Improvement
- Continuous Improvement Today
- Key Traits Of Successful And Unsuccessful CI Programs
- Four Attributes Of Successful CI Programs
- A Simple 4-Step Approach To Rolling Out An Effective CI Program
A substantial amount of material has been written about Continuous Improvement (CI), why we need it, how to do it and so on. Despite all the information that has been written, the way forward is more difficult than ever for many companies in trying to implement a sustainable continuous improvement program. This is partly due to the digital revolution that has emerged as the 21st century began. This disruption has forced companies to pursue digitising of processes as a way to streamline their core processes. Notwithstanding this, people and processes are still important to companies, no matter how much automation and associated digitisation is achieved. It’s this aspect that has created difficulties for organisations to truly implement a sustainable CI program. In part, I feel that the difficulties confronting these organisations are more due to the ever increasing amount of readily available information barraging executives and managers in regards to continuous improvement. The breadth of information that is readily available, most of it confusing or contradictory to say the least, has clouded the landscape and created a level of inertia amongst leaders in how to proceed forward with a CI program that would not only benefit the organisation but have a degree of sustainability that will survive the eventual turnover of the executive leadership.
Continuous Improvement Vs Process Improvement
Continuous Improvement is nothing new to the corporate arena. Companies such as Toyota (the famous Kaizen approach) have been committed to CI for well over 60 years and has it firmly embedded within the DNA of the company. CI can be expressed as “a culture of sustained improvement targeting the elimination of waste in all systems and processes of an organization”. There are many other definitions of what CI is and they are all relevant. What needs to be clarified, however, is the difference between Process Improvement (PI) and CI. These terms are quite often used interchangeably and often in the wrong context. I need to be quite clear PI is not CI, so what is PI? It is an organisational development concept in which a series of actions are taken by process owners to identify, measure, analyse and improve existing business processes within an organisation to increase profitability and/or performance often through reducing costs and accelerating process cycle time. Invariably, PI is a tactical program involving a select number of people who are charged with this responsibility, whereas CI is a strategic program usually involving the entire workforce.
Continuous Improvement Today
While Toyota’s Kaizen program is truly a lean manufacturing framework that was created in the aftermath of World War 2, (Toyota Production System-TPS) there have been many different variations of CI since then that have made their mark on the corporate world: TQM, Six Sigma, ITIL, Lean Six Sigma to name a few. However, it would appear that each decade seems to herald another version of continuous improvement tools and methodologies for corporates to embrace en-masse with the assistance of consultants. The end result is virtually the same for a significant number of companies, a couple of early wins and not much else to show for the efforts that have been employed. Even as we are now well entrenched in the 21st century, the CI culture is still a mirage to many companies as they seek to drive cost efficiencies through their organisation. Armies of consultants are still engaged to deliver what is initially promised as a panacea for all the issues that the company faces in terms of cost containment only to find that the results are far from what was expected. As a result, a flurry of finger pointing ensues that does nothing more than result in the departure of the sacrificial lamb and another re-organisation of the company. Surprisingly, the culprit in all of this is usually the lack of desire or willingness by senior management to make fundamental changes to the way that the company operates. Philip Atkinson in his article ‘Lean is a Cultural Issue' stated in his opening sentence ‘Organisations stand little chance of implementing Lean unless they have paid at least equal attention to creating the right culture, and the conditions and circumstances which can become the foundation for implementing change’. This, I believe, underpins the whole dilemma that confronts companies when a decision is made to introduce a CI program.
Key Traits Of Successful And Unsuccessful CI Programs
Success is one of those terms that is used too frequently to form a judgment on activities engaged by individuals or companies. All too often we forget that it’s a noun used to generically describe the outcome. The dictionary meaning of ‘success’ is the accomplishment of an aim or purpose. So when we talk about the success we need to be mindful that the outcome is predicated by whatever was agreed to as criteria for success at the beginning. From a generic perspective, we must be of the opinion that a successful CI program should be able to, if we use our definition from before, create a ‘culture of sustained improvement targeting the elimination of waste in all systems and processes of an organization’. A successful CI program, if we look at the examples from history to date, is something that has taken time to create and has had many challenges. At its simplest, a successful CI program should involve everyone from the CEO down to the shop floor. Conceptually it should form part of the DNA of the company and involve everyone including new starters from day one as they are inducted into the company. The program is measured as to its ongoing management from both the way that it drives the company to improve the way it works and the way the people work. From an analysis of CI programs that have been implemented over the past 30 or so years, it has been found that companies that have managed to create a successful CI program usually have the following traits:
- A robust measurement system to measure not only the savings in terms of actual money saved through efficiencies but also the effect it has on customer satisfaction. This is an essential continuous learning tool.
- A CI learning program that has a clearly defined pathway that ensures leaders within the company have a certain level of expertise in CI
- Everyone is responsible for CI not just a department with a select number of people trained to ‘fix issues’
Before embarking on deployment of a CI program, the causes of failure or a sub-optimal result should be investigated so that we can learn from these experiences. From my involvement in various CI programs from Six Sigma to Lean Six Sigma deployments at large companies, I have experienced attempts that commenced with the best of intentions only to limp to either a painful death or a result similar to a coma. The first point that I want to stress is that it has nothing to do with whether Lean is better than Six Sigma or vice versa. Both are excellent methodologies, when implemented properly, can deliver an improvement to the bottom line of between 5-10% of NPAT. The problems are invariably associated with the deployment of the program within the company. In summary, the common causes of the failure of a CI program can be attributed to one or more of the following factors:
- The program is not driven or championed by the CEO
- Unrealistic short term expectations of the program at the outset (over-promise and under-deliver)
- The program does not involve everyone in the company. A select number of people have been given the honour of being CI focused.
- The CI program is not linked to the Business strategy.
- Balanced scorecards and KPIs do not reflect the investment in CI
Once we understand what the root causes are when something fails, only then are we in a position to prescribe the solution to the problem. Given the factors previously highlighted that contribute to failed CI programs, I have detailed the following attributes that should exist in a successful deployment of a CI program. Remember, it is not whether you have Lean, Six Sigma, Lean Six Sigma or Quality Circles as an underlying methodology to deploy. These have all be proven to work. It is how these programs are deployed into an organisation that will determine their success or failure. This brings to mind an old analogy, “a carpenter should never blame his tools for poor workmanship”. The same is applicable here, we should not blame the continuous improvement methodology for the failure of the program, but the way it’s deployed.
Four Attributes Of Successful CI Programs
The four fundamental attributes synonymous with successful CI programs are:
- Senior executives need to understand that culture change is required
- Alignment of CI Program to Corporate Strategy
- Long-term Commitment with CEO endorsement highly visible
- Operational Performance to be visible through quality metrics
Each one of these attributes should exist from the outset to ensure that the company has the best chance of success. All too often employees are quick to ascertain whether a company is serious about a corporate wide initiative. If there is a perception that the senior management is not totally on-board, then acceptance on the shop-floor will be difficult to achieve. Executives across the organisation need to be not only trained in what they need to know from an executive viewpoint, they also must also change the way they work. Culture change to align with the CI program is an integral part of its success. This is not a short term initiative that will be achieved in a 6-12 month timeframe. In reality, successful culture change is a 5 to a 7-year journey. The change begins with the executives developing clear messaging about what it means for the company and the length of time it will take for the company to achieve this. The corporate strategy is a company’s roadmap that has been set by the CEO and board. As such, all BUs should be aligning their business strategy to the overarching corporate strategy. This is no different with the CI program. The CI program must be either a part of the corporate strategy or be aligned to it. One of the key aspects of any successful program has been the long term commitment by executives, in particular the CEO. Coupled with this, is the careful messaging that needs to be communicated out to staff so that there is no ambiguity or perception that the CI program is just a quick fix or the ‘program of the moment’. “You can only manage what you measure”, “In God we trust, everyone else bring me data”. These and countless other quotes I have used in the training room and also heard often in presentations are usually attributed to people like Edward Deming. The underlying emphasis of these statements is around the need for data to manage operational performance. Furthermore, the metrics that we use to measure operational performance need to be representative of the business that we are managing. Too often, metrics become a casualty of convenience. If systems need to be changed to deliver accurate reporting, then so be it. The return on the cost of these changes will be substantial when you consider that effective CI programs can deliver millions of dollars in benefits both from improved processes and changed behaviours
A Simple 4-Step Approach To Rolling Out An Effective CI Program
I believe it’s important that we percolate the key attributes into a simple and easy formula that can be replicated in any business. If we promote as one of the key facets of process improvement that simple solutions are often the most effective way to solve process problems, why should it be any different at a strategic level? Therefore, I strongly believe there are four key steps that need to be followed to ensure that best success in creating a positive and lasting CI program. They are:
- BASELINE: Perform a diagnostic of where the company is currently at, in regards to being a CI culture
- VISION: Create the CI Vision for the company that is in harmony with the strategic corporate vision
- UPSKILL: Train and coach the workforce with the necessary skills to create the CI culture
- CLOSING the GAP: Focusing on CI activities to realise the vision and measuring performance through quarterly and yearly goals.
Notwithstanding the elements that I have highlighted above, this does not in any way diminish the importance of CEO/Executive involvement, communication, and quality metrics measuring operational performance. These are also important attributes that underpin a successful CI program, however, to ensure that the CI program is set up for success, the four steps highlighted above need to be addressed. The way to picture these four key steps is quite similar to an ABCDE strategic planning model that I was exposed to a number of years ago. The ABCDE steps are described as 1. Assessment, 2. Baseline, 3. Components of strategy, 4. Deliver and 5. Evaluate. In essence, this model is not unduly different from what I’m proposing in terms of creating a successful CI program.
Let’s have a closer look at each step in this process:
This is really about having a deep and impartial view of where your organisation is currently in terms of being a CI culture. There are a number of attributes that need to be assessed and scored against agreed criteria. This ‘current state’ analysis forms the baseline from where we want to lift the organisation. The impartial view should not be a ‘sugar-coated’ assessment and is all about baselining the organisation. I have witnessed some very ‘generous’ assessments of a current situation which do not serve any purpose other than providing a ‘false sense’ of the current situation, which in turn creates a diminished need to change the CI Culture of the organisation.
This is where the organisation collectively wants to be. This vision is ideally conducted once study trips or visits have been undertaken of successful CI organisations. This is vitally important as a successful CI culture needs to be clearly articulated and this can only be achieved through observing successful companies that have achieved this. It would also be advantageous to bring in experienced consultants who have had experience in developing CI cultures to guide the organisation in developing its vision. The CI vision should be an inspirational 5-year goal that covers all aspects of a CI program and how it connects to the organisation’s strategic vision.
As part of the ongoing cultural change that needs to occur in an organisation, the upskilling of the workforce is important to ensure that the CI program can be embedded in the organisation’s DNA. While it may be advantageous to bring in experienced CI trained people at the beginning of the journey, this should in no way void the responsibility of the organisation to upskill their staff. All staff should have exposure to CI training, even if it’s basic CI hygiene factors such as 5S, basic problem-solving skills and visual management boards. Management and highly motivated individuals should be provided with more detailed training to ensure that they are suitably equipped to tackle the larger more cross-functional issues that need to be addressed. Ultimately, basic CI training should be included as part of the induction training for all new staff as is most HR and OH&S training that’s usually provided on the first day of work for all new entrants.
4. Closing the Gap
This strategic piece is where the focus and efforts are applied towards the activities that will assist in realising the CI vision that was agreed to at the outset. This might seem obvious, however, I’ve seen too many times, programs go astray when short term issues hijack a CI program. A common example is where organisations have budget pressures such as an uplift in expenses, the CI program is then redirected to look for ‘cost out’ activities. The CI program to be successful must maintain focus on the end game and resist the culture of ‘short-termism’ that pervades the corporate culture today. I am not advocating that the program should ignore short term goals, but they should not become the overriding measure of the program. As ‘closing the gap’ is about achieving the long term vision, this aspect should involve a number of components such as: (1) training staff across the organisation (2) long term measures of success linked to the corporate strategy and (3) milestone events that need to be achieved such as the first 12 months/ 2 years etc. Incidentally, milestone events would ideally incorporate measures such as (i) the number of people trained (ii) the benefits that have been achieved in terms of extractable dollars (iii) improved customer interaction measures and (iv) transformation of key processes. Regular monthly meetings among executives and monthly communication to the wider company should accompany these activities. The monthly meetings should have a focus on what is and what is not working together with reviews of performance measures. The yearly business planning cycle should incorporate the CI program and do an assessment of the previous year’s activities against the plan and recalibrate next year’s plan and associated milestones against the strategic plan. In summary, creating a successful CI culture is not easy, if it were, there wouldn’t be the constant need for process improvement and/or continuous improvement resources to assist companies in changing the way they work/operate. I truly feel and my personal experience in this field has significant input into this viewpoint, that while companies understand the need to change and become more efficient, the desire to fundamentally change the way the company or organisation operates is the most significant challenge to overcome. To create a culture is not a 90 or 180-day exercise, it is a three to five-year journey at best. The earlier this is understood at the executive and management level the chances of a successful implementation of a CI culture are significantly improved.
References 1 “An overview of continuous improvement: from the past to the present” Nadia Bhuiyan and Amit Baghel 2 “Lean is a Cultural Issue” Atkinson P, Management Services, Summer 2010