3 Additional causes of CI derailment

derailment

Continuing with the theme of our previous post on “discontinuous improvement,” we have identified three additional causes of Continuous Improvement derailment.

As you’ll see, all three are preventable. But, like many things in life, simple things are not always easy.

For example, removing barriers or obstacles to Continuous Improvement seems a simple and straightforward objective. Yet there are many instances in which the people in charge fail to do so!

One barrier that commonly falls into the ignored category is that of an important individual in the organization who is simply not on board. The individual may feel uncomfortable or threatened by the new way of working and leading; or may simply not agree with one or more key principles of a continuously improving organization, such as the import of what the customer values, or the way to treat employees, or the imperative of constantly improving the work, or using facts and data instead of just opinion. When someone in a position of influence is not on board, he or she creates a misalignment between what people hear and what they see.

If the misalignment is not corrected, the situation has the potential to bring the CI journey to a close.

Similarly, while communication and alignment are essential, they are never really sufficient. People also need the training and skill development to follow the organization’s improvement methodology. Lack of capability or training will prevent people from progressing very far.

But personnel policies or practices can also easily obstruct productivity improvements. Sometimes jobs are defined so narrowly that managers cannot easily move people around to take advantage of productivity improvements. When managers are rewarded financially or in organizational prestige based on the number of people who report to them rather than how efficiently and effectively they operate, managers have powerful disincentives to increase productivity and move their people to where they would add more value.

Often organizations lack an effective mechanism to match up the skills and capability that one department has in excess resources with the needs of another department with a need for resources. To move resources effectively to their point of maximum value, you must develop a system of information about the skills and capabilities of your workforce. A thorough and cross-functional knowledge of people and their skills can enable an organization to move freed up resources to where they can contribute the most value rather than laying off the excess people and snuffing out motivation for further improvements.

No one but the leadership of the organization can remove the barriers to effective continuous improvement. Careful monitoring of progress to identify and remove barriers is essential to achieving a culture of continuous improvement.

Lack of quick success or “quick wins” is another common cause of CI derailments.

Early successes are the nourishment required to keep improvements going. If improvements are too slow, people get discouraged. People begin to adjust the pace of their effort to the slow pace of results.

Third, letting up on the gas after successful improvement initiatives is a more common occurrence than one might think!

In other words, success often carries with it the seeds of failure: the greater the success, the less urgency is felt for further improvements. Without a continued level of urgency, momentum toward improvement will disappear. People will be pleased with the level of performance they have achieved and turn their attention to other things.

To achieve a continuously improving culture, you must never rest. The leaders must continue to reward success, and identify bigger problems or opportunities. They must continue to strengthen the organization in continuous improvement and begin promoting based on skill at improving the work.

The hardest part of continuous improvement

While almost every business puts some amount of effort into Continuous Improvement (CI), making ongoing and meaningful improvements to a business or to work processes is not easy.

discontinuous_improvement

We have also noticed that regardless of the specific methods used for making improvements, almost all of these initiatives aimed at gaining greater efficiency, quality, speed, and/or customer delight have two important things in common:

  1. They generally produce some improvements, and
  2. Then they peter out

So, as it turns out, these well-intended CI plans are, in fact, “discontinuous,” and the hardest part of Continuous Improvement is making it “continuous!”

Based on our research and experience, there are some common reasons why CI efforts tend toward becoming discontinuous.

The most common pitfall that leads to ineffective CI efforts is unclear or delegated leadership. Continuous improvement must be fully embraced by every line manager. Delegating the effort to a Quality Manager, HR leader, strategic planning manager, or other staff person, is very likely to lead the effort to fizzle.

John Kotter, a recognized pioneer in the field of leading change, uses the term ‘guiding coalition’ to describe a powerful and strategic group that works together to bring about the desired changes within an organization. The team must be committed to the achievement of a continuously improving culture. It should include a majority of the most powerful people in the organization and may also include some people who may not be a part of senior management.

The next culprit is insufficient communication. Leadership must continue to communicate at every possible opportunity and every possible way why continuous improvement must become part of the organization’s DNA.

The vision must be clear and simple, and throughout the organization, people in leadership positions should constantly communicate the importance of continuous improvement and the progress to date. Successes must be widely shared, learnings must be plowed back into the organization to accelerate results, and new opportunities to become better at improving should be identified and clearly communicated. New employees must hear the why, the how, the
history, and the vision of what’s next.

Finally, neglecting alignment is a sure way to undermine a comprehensive CI effort. Every one of us has our own personal goals and objectives in addition to the goals and objectives of our organization as a whole and our job in particular. When these get out of alignment, progress will stop.

For example, a natural and intended outcome of most process improvement is the ability to do more with less — often with less people-time. Instantly, we have a conflict between the organization’s goals for cost saving and people’s need for income retention. And processes cannot be effectively improved or improvements effectively sustained without the support of the people doing the work. Not coincidentally, the company with the longest history of a continuously improving culture, Toyota Motors, promises employees a very high level of job security.

The leadership must think several moves ahead to both maintain alignment and to capture financial gains from productivity improvements. The choice of where to focus improvement efforts is probably the most critical.

Among the best areas on which to focus are:

  • Aim improvement methods to address the constraint to sales.
  • Improve productivity in the parts of the organization with too much work, in order to eliminate the need to hire.
  • Improve productivity in an area where people have the skills that, if freed up, could be transferred to departments with too much work or that have had attrition.
  • Improve non-people costs, such as energy, scrap, paper waste (‘if you want to find the waste, find the paper’), and work with suppliers to identify ways to reduce costs.

The Best opportunities?

continuous improvement

Continuing with our previous post’s theme of identifying waste (or the best opportunities for improvement), the process of doing so is one that is often misunderstood.

Case in Point
For example, we were invited to visit a large packaging company which had been “in Continuous Improvement (CI)” mode for many years. They wanted help because their efforts were not having any impact on their profitability.

Their sector of the industry suffers from substantial over-capacity, which has created major challenges for all the major players. We began with an assessment, during which we met a broad cross-section of people so we could gain an understanding of what they had been working on, how they had gone about it and what results they have achieved.

What we found was very interesting…

Conventional wisdom in this industry dictated that the only way to make money is to keep the presses running. Consequently, anything that slows down the presses needed to be “fixed.”

With that principle in mind, the company launched a number of projects aimed at improving uptime; project teams consisting of the crews and technical people were put in place and they developed good ways of measuring performance, getting to root causes and taking corrective action. Several of these projects delivered substantial improvements in up-time.

However, in this industry, cost of raw materials is by far the largest proportion of total cost. It therefore made sense to re-focus the improvement efforts on ways of improving yield, which was defined as the percentage of inputs that end up as saleable product made correctly the first time.

This new focus revealed all kinds of problems leading to yield loss, including:

  • Lack of training
  • Inconsistent procedures
  • Errors in getting correct customer requirements
  • Inconsistent internal information
  • Standard loss factors which may lead to complacency
  • Inconsistent raw materials coming from a sister plant

This is an example of a well-intentioned company with well-intentioned people who did not ask what impact their projects would have on the bottom line. If that question had been asked, a much different direction would likely have been taken.

As Bill Conway often said, at least 50% of Continuous Improvement involves working on the right thing.

4 Ways to identify waste

As noted in our previous post, people sometimes have trouble identifying the real waste (or opportunities for improvement) that exists within their organization.

Over the years, we have found the following four approaches to identifying waste to be effective:

A goal driven search: Start with the most pressing organizational goal and drill down to find the waste that affects that goal.

Do you want to save time, money, improve quality, conserve capacity – what? The goal driven search for waste takes that goal and looks for any problem that affects it.

  • If your goal is to free up people’s time, you would then study the time to identify and prioritize every aspect that waste’s time. A work sampling study would provide you with a great deal of information about this.
  • If you want to free up production capacity, you would study and prioritize all the factors that waste your capacity – bottlenecks, set up times, producing the wrong thing (product that sits in inventory), yields – all the capacity spent producing product that cannot be sold, production capacity devoted to rework.
  • If you want to free up cash, you would search for waste in all the cash expenditures: utilities, component inventories, can you accelerate collections, can you shorten the time between order and delivery to accelerate invoicing? Can you shorten the time to collection? Can you ship more from inventory without adding to it? Are you expending cash on overtime that could be reduced if you reduced time wasters?
  • If you want to increase revenue, you would focus on identifying and quantifying the waste in all the factors that get in the way of sales. Use of sales reps time, selling methodology, lead generation and lead yield, causes of lost sales, delays in installations or shipments.

The distinctive feature of the goal driven approach is that not all waste is treated equally. Instead of looking for waste in all its forms, this approach zeros in to identify and prioritize for removal of all the waste associated with a particular important goal.

The brainstorming approach: Collect a group of people knowledgeable about the work and solicit all the ideas about what waste is where.

The brainstorming approach is perhaps the quickest and easiest way to identify an extensive list of the waste in an organization. It is also a great method for getting people involved in looking for and identifying the waste.

Because the people who know most about the work identify the waste, these people are often very committed to working on improvement projects to get rid of that waste. On the initial attempt to identify waste, people generally leave untouched the waste that is deeply embedded in operating practices and instead surface more superficial opportunities. However, some of these will bear substantial fruit and an organization’s skill at surfacing waste will generally grow as it develops more experience with studying and eliminating waste. Brainstorming areas of waste is an excellent way to start an organization on a path of systematic continuous improvement.

The work walk-through approach: Directly observe the work as it is done, searching for and capturing every bit of waste you can spot.

Staple yourself to an order! Not literally, but one way to identify waste is to get a group of people together to follow the work all the way through the process watching for all the places that waste occurs. It is a good idea to make sure your organization has a clear idea about “amnesty” and so that the people hard at work do not feel you are watching for any mistakes they make. As you know, almost all the waste in an organization is due to flaws in the system of work; management has the job of making sure the system is working well so as to minimize wasted time, materials, capital, etc. You can enlist people’s help in identifying what aspects of the system make it harder for them to do the job right with the minimum of time and effort.

The check-out the process approach: Create a value map to identify inventory pileups, bottlenecks, and delays. Use our process evaluation tool to analyze a process and identify and quantify the waste. Or use a SIPOC tool to evaluate a high level process flow.

As you may know, a SIPOC diagram is a very high level process flow, identifying each key input and output of each process. Once you have these identified, you list the quality criteria for each input and output, select an importance factor for each criterion and select how well it is met (or “don’t know”) and the SIPOC tool will calculate the high impact areas to go after for improvement.

what should we improve?

Spring boarding off of our previous two posts on decision making, people often fall into the pitfall of missing the biggest opportunities for improvement because they ‘decide’ on a solution before evaluating the best opportunities for improvement.

In other words, instead of trying to identify waste, they come up with lists of idea driven improvements.

This happens very simply when someone comes up with an idea for an improvement (usually some new technology or equipment that will do something faster or better), puts together a proposal, and then tries to implement it.

The problem with the idea-driven approach is that there is very little correlation between the list of ideas for improvement and the biggest problems or opportunities for improvement within the organization. As noted above, the idea-driven approach to improvement depends on someone identifying a solution at the outset.

The biggest opportunities are usually buried in the tough long-term problems for which solutions are not immediately obvious to anyone! If a solution doesn’t occur to someone, the problem doesn’t make the list. If it doesn’t make the list, it is never studied sufficiently to come up with a solution.

Organizations get further faster by identifying the waste first and choosing the best opportunities from all of the areas of waste you have identified. A portion of the waste is easily spotted and addressed if you take the time to collect the information. But much of the waste is hidden — built into budgets, accepted practices, current operating procedures, and shared assumptions. It is built into processes that are compensating for problems that have not yet been solved. This waste is difficult to see without expanding the vision of what is possible.

How to identify the waste?
Over the years, we have seen several approaches to identifying the waste put into practice. Four such approaches will be the subject of our next post.

5 Keys to making the best “tough” decisions

decision making

Continuing with the “decision-making” theme from our previous post, it’s important to recognize that there are different types of decisions and different ways of going about making each of them.

The simplest type of decision involves known knowns: That is, we know what information we need in order to make a good decision and we can acquire that information. These decisions can be mapped out with simple decision-trees to reliably and quickly produce good decisions. For example, a supplier selection process can be mapped out and reliably executed to produce good results.

Next we have situations that involve known unknowns: The problem is knowable, but not simple. We require an expert to gather and process the information to arrive at a reliably good decision. Decisions about how to design a website to maximize traffic or where to position a power plant relative to cooling sources are examples of “known unknowns,” which are often referred to as “complicated decisions — the domain of
experts.”

Tougher decisions involve unknown unknowns: These complex decisions, in which we may not even know all the right questions, are
increasing in frequency as advancements in technology and rapid change take place around us. As a result, many strategic decisions organizations face today carry a great deal of uncertainty.

As more decisions fall into the “Unknown Unknowns” category, managerial decision making that relies on learned best practices is no longer adequate. Consider that “best practices” are by definition past
practices; and if the industry, the organization or the underlying assumptions are in flux, what worked in the past may have little bearing on the decision today.

For complex decisions such as these, a decision making process designed for uncertainty can be most helpful. Five critical steps can help you improve your organization’s process for arriving at the best decision
in a complex situation:

  1. Start with a clear goal or objective. This step will help an organization refrain from starting with a compelling idea and backing into the rationale.
  2. Widen the alternatives you are considering. As the French philosopher, Emile Cartier, put it, “There is nothing more dangerous than an idea when it is the only one you have.” A single idea is dangerous because when we focus on our current option, other and quite possibly better alternatives are outside our spotlight. Yet our natural inclination once we arrive at an idea is to stop looking for alternatives and devote our effort to convincing ourselves and others that this is the right decision.
  3. Know what you know and what you don’t know. Behavior economists assert that human beings are wired to give much more weight to information we have than to information we do not have and by doing so, we miscalculate our risks and opportunities. Experts suggest that we write down the most important information we are missing. Otherwise, we risk ignoring what we don’t know because we are distracted by what we do know, especially in today’s information-rich businesses.
  4. Achieve distance & perspective before deciding. This is often called creating an emotional distance in order to enable one’s self to make better decisions. If you were an outsider, with no emotional stake in past decisions, what advice would you give yourself? Bringing in other perspectives, suppliers, customers, and other stakeholders can also help provide different perspectives on the decision to be made. Another way to gain distance is to imagine the impact of the decision one year in the future or even five or ten years.
  5. Take a hard look at the uncertainty. One way to combat uncertainty is to figure out what you do know and use that to “bookend” the decision: what would be the outcome if all the bets go against you, and what would it look like if everything fell into place. This can help you evaluate if there is more upside opportunity or downside risk. Another approach is to experiment and learn from small tests before going whole hog. Find ways to test the waters or test some key assumptions to reduce the range of uncertainty to arrive at better decisions. The greater the uncertainty and risk associated with a decision, the more valuable these small experiments will be.

Decision-Making Process?

decision making

Has your organization defined a “decision-making process” and, if so, is it widely and regularly put to good use?

Consider that making decisions could very well be our most important responsibility as leaders and managers — and also the riskiest. Yet the decision-making process is rarely studied and improved.

In fact, we’ve found that decision-making is viewed as more of a craft than a process, dependent entirely on the skill of the craftsman which varies greatly from person to person.

In a Harvard Business Review article, A Checklist for Making Faster, Better Decisions, author Eric Larson shared a study of 500 managers and executives which concluded that “only 2% regularly apply best practices when making decisions, and few companies have systems in place to measure and improve decision making over time.”

Similarly, data-driven decision making has been advocated for decades, yet this approach has not lived up to expectations. For example, behavioral economists report that “data driven” decisions increase confidence in the decision far more than quality of the decision.

Dan and Chip Heath, in their book Decisive, point out that “Our normal habit in life is to develop a quick belief about a situation and then seek out information that bolsters our belief.” AKA, confirmation bias!

However, decision making processes can be standardized and improved upon to consistently yield better decisions, and this will be the subject of our next post.

Implementation!

completed

If you truly want to achieve maximum results from your improvement effort, it’s essential to have an effective implementation and sustainability plan.

Consider that, even when people excel at identifying major opportunities for improvement, if they don’t execute, they don’t make gains. In our work with hundreds of organizations, we have observed that the most successful are outstanding at execution.

These execution plans involve the use CI tools for measurement, applying accepted best business practices such as the “4 Disciplines of Execution” (see related post), as well as a number of key focus areas, including:

  1. Get senior leaders to become actively involved
  2. Identify clear project plans for delivering results, including measures and milestones
  3. Engage team members and stakeholders
  4. Set expectations and consequences — both positive and negative
  5. Develop an organized structure and an activity / accomplishment reporting plan – communication matters!

Performance & Accountability

accountability

Virtually every organization we’ve encountered struggles with developing teams. Many teams are dysfunctional; they take too long to accomplish tasks, the work is filled with errors and waste, the costs are excessive and turf wars abound. Others struggle to stay-the-course; as a result, their efforts to make improvements are ineffective and then slowly peter out.

The necessary ingredients for developing high performing teams include:

  • Strong leadership and sponsorship
  • Alignment around a common purpose
  • Task and project management
  • Communication and meeting management
  • Measurable performance targets
  • Identifying the right process/game plan to achieve results
  • Holding people mutually accountable for results

It is often the final bullet that brings about failure, as holding people accountable can be a process within itself!

In a Harvard Business Review article, it was suggested that achieving a “culture of accountability” requires clarity in five key areas:

  1. Clear expectations. The first step is to be crystal clear about what you expect. This means being clear about the outcome you’re looking for, how you’ll measure success, and how people should go about achieving the objective. It doesn’t all have to come from you. In fact, the more skilled your people are, the more ideas and strategies should be coming from them. Have a genuinely two-way conversation, and before it’s over, ask the other person to summarize the important pieces — the outcome they’re going for, how they are going to achieve it, and how they’ll know whether they’re successful — to make sure you’re ending up on the same page. Writing out a summary is a good idea but doesn’t replace saying it out loud.
  2. Clear capability. What skills does the person need to meet the expectations? What resources will they need? If the person does not have what’s necessary, can they acquire what’s missing? If so, what’s the plan? If not, you’ll need to delegate to someone else. Otherwise you’re setting them up for failure.
  3. Clear measurement. Nothing frustrates leaders more than being surprised by failure. Sometimes this surprise is because the person who should be delivering is afraid to ask for help. Sometimes it comes from premature optimism on both sides. Either way, it’s completely avoidable. During the expectations conversation, you should agree on weekly milestones with clear, measurable, objective targets. If any of these targets slip, jump on it immediately. Brainstorm a solution, identify a fix, redesign the schedule, or respond in some other way that gets the person back on track.
  4. Clear feedback. Honest, open, ongoing feedback is critical. People should know where they stand. If you have clear expectations, capability, and measurement, the feedback can be fact-based and easy to deliver. Is the person delivering on her commitments? Is she working well with the other stakeholders? If she needs to increase her capability, is she on track? The feedback can also go both ways — is there something you can be doing to be more helpful? Give feedback weekly, and remember it’s more important to be helpful than nice.
  5. Clear consequences. If you’ve been clear in all of the above ways, you can be reasonably sure that you did what’s necessary to support their performance. At this point, you have three choices: repeat, reward, or release. Repeat the steps above if you feel that there is still a lack of clarity in the system. If the person succeeded, you should reward them appropriately (acknowledgement, promotion, etc.). If they have not proven accountable and you are reasonably certain that you followed the steps above, then they are not a good fit for the role, and you should release them from it.

You Want it When?

quick-wins

Continuing with the theme of driving and sustaining change, one proven way to get people on-board with new and better ways (i.e., improvement) of doing things is to achieve success – and to do so quickly!

Thus the concept of “quick wins” can be very important.

A “quick win” is exactly what it sounds like, that being a successful improvement made in a short amount of time. A few guidelines for defining and completing a “quick win” include:

  • Must be completed in 4 to 6 weeks at most (many are implemented much faster such as in a “kaizen blitz” where a small group focuses full time on an improvement for a day or two).
  • Relatively low cost of implementation (if a solution requires a significant capital it will likely take longer periods of time to gather approvals, funding, etc.).
  • Small or manageable team size. If an initiative requires a large team or cross-functional buy-in, chances are it will be a slow win if it succeeds at all. In fact, a quick win is almost always an improvement that can be completed with the people closest to the work and with the resources close at hand.

Sometimes a “quick win” is a high value improvement executed with speed. But even an improvement with small dollar impact can have a great ROI — because the time and expense invested is so low and the organization begins reaping the benefits so quickly.

In addition to making sustainable and potentially recurring gains in less time, there are numerous other benefits associated with a “quick win,” which include:

  • Builds momentum
  • Defuses cynics
  • Enlightens pessimist
  • Energizes people

A few best practices for successfully achieving “quick wins” are:

  • Don’t Let the perfect be the enemy of the good. If a problem appears to be too costly to tackle or if resources are not readily available, seek a more attainable “plan B” as opposed to tabling or abandoning the effort.
  • Eat the elephant one bite at a time. Many of us choose scopes that are way too big. A large scope greatly slows the work and reduces the likelihood of success, making the project into a lumbering giant.
  • Rely on the people close to the work, who often have the best ideas about the problem and possible solutions.
  • Keep it simple.
  • Have fun! A quick win is both satisfying and fun! Make sure you celebrate and spread the news!

Challenges and best practices associated with continuous improvement