Managers have been trying to reduce costs and improve margins since Adam was a boy. The scientific method for problem solving has been with us been since the renaissance. And using this for Continuous Process Improvement will work too.
Continuous Process Improvement and management fads
Lean Six Sigma, TOC, Re-engineering, BPR and BPM are all management fads for studying processes from start to finish with the aim of saving time and money and raising effectiveness.
When I began my career in business improvement I trained in Lean Six Sigma. I soon became a zealot, and confused when people didn’t react the same way.
“This is powerful stuff” I thought, “why wouldn’t you want to do it?”
Yet, a study published in the Harvard Business Review in 2003, called “What Really Works” looked at popular management methodologies and compared their results. Comparing shareholder returns over a five year period. They were looking at methodologies such as LEAN, Six Sigma, TQM and so on.
The study concluded there was no statistically valid improvement at all. Surprised, the authors said “Most of the management tools and techniques we studied had no direct causal relationship to superior business performance.”
Instead of running with management fads, focus on redefining standards in your organisation. Apply this to processes, products and services alike. Remember that however admirable performance may be it can always be improved.
To get your organisation on the path of continuous process improvement and generate lasting gains, follow these principles: click to tweet
1. Support: Extended involvement of dedicated resources and supporting structures
Support structures and processes can’t be temporary. Too often the outside consultant moves on before the new skills and behaviours have taken root.
In one organisation I was brought in to help with a failing improvement project. Shifted to another project, the previous consultant left the improvement team in the lurch. Left to wrestle with data processing tasks they were not skilled enough to take on.
This led to frustration and delays, and an almost abandoned project. I am not advocating the silly fad tools just mentioned. But the necessary support must be in place until the requisite skills become self-sustaining.
2. Involvement: It’s not something you ‘do’ to teams, they have to own their own problems and solutions
Outside help is legitimate if you are to build the skills and behaviours you don’t currently have. But outside consultants can never be the change agents. The teams themselves and the leadership must own their own projects. This includes choosing what to work on and how to put a solution in place. Awarding the credit for outcomes.
The most rapid way to create employee engagement in your teams is by involving them. I’ve been working with an executive who as a sponsor of a major project is wrestling with how to improve the take-up of this new system. At first he saw this as a communication problem. That they, “don’t understand.” Now, while communication is important, what he’s looking for is commitment.
The best way to build commitment is by involving people. This way they will have a sense of ownership. Involve your frontline teams in selecting the projects they believe will make a difference. This way you’ll build ownership and engagement. Then you’ll have their commitment.
Use the consultants to bring in the necessary know-how. But to build the necessary commitment, involve your teams in the development and implementation.
3. Incentives: Incentives need to be matched to the KPI of the improvement projects
Incentives matter. Hanlon’s Razor counsels, “Never attribute to malice that which can be adequately explained by stupidity.”
Peoples actions are related to how they perceive the world. Logical individuals acting as their rewards dictate in a complicated world. To an outsider looking in, it can seem as though peoples actions are like conspiracy, collusion, or stupidity. But it is people acting with no main organisation and working in their own best intentions
You can exhort your people to ‘improve’ as much as you like, but if you don’t reward for it then nothing will change. Incentives and performance appraisals are just one aspect of the structures needed to enable a continuous improvement program to take hold.
4. Small: Start small and keep them small – eat the elephant
Project teams should are best kept small to manage complexity. Focus first on the obvious quick wins to create momentum. Then as larger improvements get started keep them to 3 to 4 month delivery cycles.
In his book, Business at the Speed of Thought, Bill Gates quotes a study that showed 42 percent of all business reengineering projects were abandoned before completion. This survey conducted in 1996, and based on my experience, I’d say this is pretty much hold true now.
Projects that three to four months duration have much lower failure rates. Issues and problems are more likely dealt with earlier and less likely to cascade due to complexity.
Keeping projects small and short ensures simplicity because important trade-offs about what is important are made. With big projects it’s too easy to keep adding to the scope. With smaller projects it’s implicit that the goals must be focused.
Breaking down projects into smaller chunks gives you the strategic agility to manage uncertainty. This allows teams to make quick changes, preventing resources allocated to a doomed project.
Gates articulates it well: “If short projects fail—and a few do, for a variety of reasons—your loss in time and money is much smaller. It’s far easier psychologically to pull out and redirect your development team when people haven’t spent a year of their lives working on a project that is now going down the tubes.”
5. Leadership: Executive leadership and sponsors need to be directly involved in projects and not just participate
The corollary to incentives is that teams might be all too willing to tell you the good stories and not the bad. Reporting the status of projects in a favourable light. Or reporting how they’d wish for the project to be progressing. As opposed to the reality of how it’s progressing.
In a recent project I consulted on, the sponsor was astonished when the project that had been green for months suddenly blew up and turned red. “How did this happen?!” he asked. The answer laid in him not involved and asking for evidence of the project’s progress.
Metrics are useful when they give us a standard of satisfactory completion and milestones achieved. These are the outcomes. But what’s also needed is a set of leading indicators that tell us if we’re on the right track or not.
Develop and agree on mutual set up metrics. These should be leading and lagging indicators. Which will tell you whether you’re on track and have met your milestones along the way.
Leaders must be involved in interrogating these measures, helping to guide accountability. This is what will move the dials in the right direction. Helicopter management just wont do.
Forget the silly fads and concentrate on creating a culture of improvement. Give your staff the support and tools. Involve them with the correct incentives and metrics. Keep all projects manageable in ambition. This method and philosophy repeated will generate the sustainable results your organisation needs.