By Mike Loughrin, CEO of Transformance Advisors
Organizational improvement programs, such as lean and six sigma, emphasize how their methodologies and tools do not create permanent processes.
Program experts acknowledge how improvement projects will move you from an current state to a better, more effective, future state.
But, while gains from a project will be tremendous, the journey is just beginning.
Two critical reasons why a new future state is just the beginning are:
- All improvement projects have limited resources and cannot possibly create a process which will provide perfect performance at the lowest total cost
- Reaching perfect performance, if possible, will always be temporary – the environment is constantly changing and all processes need to respond to these changes
The reality, we all deal with, is the knowledge that nothing’s permanent. This means you need a culture of continuous improvement if you seek to create and maintain a sustainable organization.
“Continuous improvement is defined as the routine and incremental improvement, to a process, which enhances stakeholder value or responds to environmental change.”
The 401k Effect
Think of continuous improvement as similar to the power you see with small routine contributions into a 401k retirement savings account.
A routine contribution, from every paycheck, can grow into a retirement account worth a million dollars or more.
Small incremental changes, routinely applied and sustained over a long period, result in significant overall improvement.
Consider a process involving 12 people. If each person reduces the work effort by 5 minutes per week, then you will see a cumulative reduction of (12 people times 5 minutes times 50 weeks) 3,000 minutes or 50 hours per week. This is an improvement in productivity exceeding 10%.
Think about the times you have seen big announcements from executives claiming they have a secret plan to slash costs by 5%! It’s clear that clowns have secret plans, while serious leaders have the power of continuous improvement.
“One percent improvement in 1,000 things is better than 1,000% improvement in one thing.” – Tom Peters
Where To Start
There is an ideal time to initiate continuous improvement.
For a process, you should run an improvement project to examine your current state and implement an improved future state.
For lean projects, you will typically leverage value stream mapping to find and eliminate the root cause of waste.
For six sigma projects, you will typically use the “define measure analyze improve and control” methodology to find and reduce the root cause of variation.
It’s at the point of transition, to your future state, where you turn on the power of continuous improvement. Lean folks will call this “seek perfection” and six sigma folks will identify this as the finishing touch of the “control” step.
A word of caution – don’t apply continuous improvement to a poorly designed process. Fix the process first.
“Applying continuous improvement to a chaotic process is like pushing a wet noodle. You change something today for one problem and then change it back tomorrow for a different problem.” – A Frustrated Improvement Advocate
Transitioning to continuous improvement requires reaching into the tool box and grabbing the proven techniques which work.
There is no need to reinvent the wheel and there is certainly no need to fall for the claims of some charlatan.
The most effective techniques, for continuous improvement, include:
- Root cause analysis
- Kaizen blitz events
- Problem solving
- Performance measurements
- Process audits
- Statistical process control
- Gemba walks
- Plan do check act
- Cross training
- Standard work
Each of the above involves a complete body of knowledge and requires leadership with skills and wisdom.
“History is filled with examples of continuous improvement failures. Too many have seen the techniques as simple tools which will be easy to implement” – A Warning Not To Be Ignored
The Dark Side
The power of continuous improvement is often elusive.
Even the best leaders and improvement experts struggle with the challenges of creating a culture of continuous improvement.
I’m reminded of a food company where the packaging department found a better way to glue the cardboard cases used for their products. It was a simple idea, from an employee, which saved ten minutes per day. This idea was exactly what continuous improvement is all about! Unfortunately, travel ahead two weeks and find broken bottles on the floor of retail stores. Seems the new method did not work.
It’s this dark side of continuous improvement which is often ignored by leaders and experts.
A sampling of the challenges includes:
- Sub-optimization: it’s always easy to make a small change in one department and miss the impact on downstream activities
- Documentation: it’s very difficult to keep policies, procedures, and instructions accurate when things are changing every day
- Training: a better idea from one person may not be worth the effort of training all the other people who do the same work
- Idea collection: Suggestion boxes are easy to install, but much more difficult to manage
“We followed the advice to establish an easy process for everyone to spend 10 minutes every day on improvement. We got clean work areas, which get cleaned every morning. We have not gotten real improvement, because our employees don’t know how to use the appropriate tools.” – A Frustrated Executive
Achieving a culture of continuous improvement is simply a “must have” aspect for creating and maintaining a sustainable organization.
There will always be the need for routine and incremental improvement to enhance stakeholder value and respond to the constant changes swirling around any organization.
The great news is how continuous improvement reaps big rewards, similar to making routine contributions into a retirement savings account.
However, the path to success is not short or easy. There are numerous techniques which take time to learn and use effectively. There are also common challenges which can derail the efforts of unprepared and reckless adventurers.
“What we have now is by no means perfect. It’s definitely better than what we had before, but there’s always room for improvement.” – Teruo Yabe, Head of Hospitality Creation Department, JR East TESSEI Co
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