Continuous Improvement is something virtually every organization wants to achieve. Whether it’s called continuous improvement, process improvement, performance improvement, re-engineering, Lean, Six Sigma, Lean Sigma, or some other name, the objective remains the same – develop a program or system of ongoing improvement.
Organizations approach this objective in many different ways. Initially,most start with external consultants using Continuous Improvement tools in isolated areas on specific problems. Impressed with the results and wanting those results to cascade throughout the organization, many decide to bring the expertise in-house. The importance of understanding what this means and the impact this has on the organization cannot be underestimated – unless senior management truly understands the principles of Continuous Improvement, the organization risks falling into “The Continuous Non-Continuous Improvement Cycle.”
Typically, smaller organizations and startups don’t fall prey to the cycle, as their size and structure by their very nature enable them to avoid the cycle. The cycle has seven phases: Recognition, Implementation, Coordination,Integration, Demotion, Elimination, and Stagnation. Each of the phases varies in length and the total time for the cycle to complete could take several years. The cycle is shown in Figure 1.
The initial phase typically is the result of financial pressure, with management recognizing the need for a Continuous Improvement (CI) program. To address this, the organization creates a senior-level position for overseeing the activity primarily at the tactical level. The reporting structure will vary by organization with the position many times reporting to the CFO or even the CIO in order to be able to effectively work across the usually siloed organization. If the organization is very operations focused, the position may even report to the COO. Occasionally, a matrix structure will be employed with the position reporting to the CFO and the COO. Depending on how serious the organization is about CI at this point, the position title will range from a Vice-President (serious) to Executive Director (interested) to a Director (testing the waters). Should the organization place the position under the CEO, for example, as a Chief Performance Officer (CPO), it may be classified as dedicated.
Once the senior leader is in place, regardless of the title (VP, Director, etc.),the next step is to create a CI team and begin training leadership in theorganization on the many tools of CI. The type and scope of training willdepend on the CI methods that are chosen. For example, is the leader goingto focus and use the tools of Lean, Six Sigma, or the lesser-known Theoryof Constraints (TOC)? How these methodologies and tools are chosen willdepend on many variables, including the organization’s type of business, thescope of the issues being addressed, the maturity of the organization, andthe skill set of the leader. Organizations should carefully select the tools thatthey use to ensure the greatest impact. Oftentimes, since many of the toolsthemselves overlap, it is a combination of tools that works best.
After the leadership training is completed, the organization will start deployingCI resources on problematic areas in the organization. The CI teams willwork throughout the organization in many areas facilitating and drivingimprovements. The senior CI leader continues to work with other executivesto ensure the CI team is focusing on areas that will drive organizational improvement.
After a period of time, which could be a year or two, operating managers will start to see the real benefit of having CI resources available to help them and their units improve. They begin to push for the addition of dedicated CI resources in their areas. The operating leader and the senior CI leader work closely to identify and select both projects and CI resources in the operating leader’s area. As operating units mature in their CI development, the size of the “corporate group” begins to decline, and the organization moves toward the next phase, which is Integration.
This phase actually melds into the previous phase of Coordination, as there is not a clear discerning event that distinguishes the two. In the Integration phase, the operating groups have integrated CI personnel into their organizations and cost structures. The role of the corporate group evolves to focus on more strategic issues, as well as starting to implement CI methods and techniques in corporate support areas such as HR, Legal, etc. In addition to this strategic focus, the senior CI leader also continues to provide guidance (CI best practices, etc.) to the CI resources working in the operating units to ensure a consistent approach to CI efforts throughout the organization. This phase could last several years.
Organizations that truly can discern the Coordination phase from the Integration phase have a much greater chance of success and of not falling into the Demotion phase.
This phase typically results from a significant event, such as the departure of the senior CI leader, a change in the executives in the organization, or a decrease in revenues. In an effort to quickly cut costs, or the belief that CI is now part of the company culture, management determines that it no longer needs a corporate CI leader and eliminates the position and associated staff. The staff (and perhaps the leader) are either integrated into open positions or laid off. Operating units continue their CI efforts; however, there is now some doubt as to senior management’s commitment to the effort. Organizations fall into the Demotion phase partly due to a belief they were in the Integration phase and that the culture of CI has been ingrained. In reality they were still in the Coordination phase.
Operating units, either under continued cost pressure from the previous event or through natural attrition (the CI resource either left the organization, or was promoted to a true ops position), eliminate CI personnel as they are deemed “nonessential.” CI resources are either integrated into the organization or laid off.
In this phase, any remaining CI efforts eventually end, and the organization’s CI culture, with no coordinated leadership and the operating unit’s perceived lack of management support, dissipates. Any improvements are sporadic and oftentimes sub-optimal to the entire system. Over time, the company, although improved from its foray into CI, stagnates.
Eventually, after a period of time, and after experiencing other events (CEO changes, market conditions, etc.), the organization, realizing it must improve, moves back to the Recognition phase. And the cycle repeats. A summary of the phases is shown in Figure 2.
Breaking The Cycle
Breaking the cycle is not easy. In order to break it, first an understanding of why it happens needs to be addressed. While there are many reasons as to why the cycle occurs, frequently, it boils down to the fact that many organizations treat CI as a “program” and not as a “mindset.” They unfortunately believe that, since they are using the tools of CI, then they have a culture of CI, when, in fact, they have just scratched the surface.
It is important that management fully understand what they are undertaking when deciding to launch a CI effort. CI is a way of thinking—a mindset—not just a collection of tools. While it is true that CI efforts start with the tools in order to show results, it is the continual use of the tools that drives the culture of the organization. Once the organization starts to see the benefits of the tools and begins to think about improvement differently, it starts to demand more use of the tools. So a different cycle takes root.
To develop a CI mindset, organizations should create a senior CI leader position to begin CI efforts. Once an organization reaches the Integration phase, the challenge is not to fall into the Demotion phase, but to move back to the Recognition phase and continuously reinvent the CI effort. It is in this Integration phase that organizations need to truly integrate the principles into their daily efforts. Operations and Line managers need to take ownership of the effort and it needs to become the way the organization “does things,” not just another “thing” to do. This continuous reinvention will lead to CI moving from a “program” to a true mindset – a transformation of the organization’s culture.
Staying the course in Continuous Improvement is hard, and to truly transform an organization’s culture often takes years. It’s very easy for an organization to say they have arrived, but with Continuous Improvement you never arrive, you just improve.
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