Category Archives: Continuous Improvement

Decision-Making Pitfalls: Part 2

Decision-Making Pitfalls

Our previous post shared data from a Wall Street Journal article about decision-making, which indicated that the way in which leaders make decisions (the process) is just as important as what decisions they make.

In that article, author Robert I. Sutton described four specific pitfalls associated with the decision-making process that can compromise a leader’s effectiveness as well as the effectiveness and attitudes of people throughout the organization.

The first of these pitfalls, which was the subject of our previous post, involves telling people they have a voice in decision-making when, in reality, they don’t.

Next on the list is the poor habit some leaders have of “treating final decisions as anything but!”

“Many insecure bosses have a habit that is especially damaging: After a decision has been made and communicated and implementation has begun, their insecurity compels them to revisit the choice too soon and too often. A few complaints, a small early setback, or simply anxiety about the decision can provoke such unnecessary reconsideration.”

Sutton goes on to explain that the insecurity and waffling “infects their teams.”  In addition, many of the people involved lose faith in their leaders’ ability to make good decisions, and also lose interest in implementing new directives that could soon become subject to change.

We will take a look at two additional decision-making pitfalls in our next post.

The “Hard” Part of Continuous Improvement

In past posts we have discussed the fact that more than half of all change initiatives fail, and that most “continuous improvement” efforts have two things in common:

  1. They produce some improvements
  2. Then they peter out…

Therefore, “discontinuous improvement” is, at times, the more appropriate description of what actually takes place; and as noted in one of our previous posts, there are a number of reasons why organizations fail to make their improvement efforts cultural, which include:

  1. Neglecting aligning individual or team goals with those of the organization
  2. Insufficient communication between management, the workforce, project teams and CI leaders
  3. Delegating leadership, which is a responsibility that should stay with senior management
  4. Manager’s or Sponsor’s failure to remove obstacles
  5. Lack of quick success
  6. Letting-up on the “gas” when initial results are made

Along similar lines, in a recent article about “why process improvements efforts routinely fail,” author and educator Nicolas Argy, MD, JD, suggests that despite the numerous approaches to continuous improvement (i.e., LEAN, Six Sigma, etc.), “All these systems go in and out of vogue and, just like losing weight and the latest fad diet, all of them fail or only provide temporary results.”

Argy goes on to note that measurement, questioning and reporting, tend to influence and change people’s behavior. In support of this perspective he cites some well-known research.

  • Pearson’s law –“When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates.”
  • Sentinel effect – The theory that productivity and outcomes can be improved through the process of observation and measurement.

These views are well-aligned with Dr. Deming’s fundamentals, such as the Deming Cycle, on which much of our work is based.

But regardless of your approach or beliefs, it’s apparent that the “hard” part of continuous improvement isn’t making improvements, but rather making it “continuous.”

If an organization can develop a culture in which making improvements is the constant “way of doing business,” then they can achieve break-through gains on a recurring basis as opposed to the ad-hoc improvements associated with an on-again/off-again effort.

 

A Different Take on Waste Walks

As you are likely aware, a “Waste Walk” is a planned visit to where work is being performed  (often referred to as gemba) to observe what’s happening and to note the waste. In many organizations Waste Walks have primarily taken place in manufacturing, warehouse or shop-floor environments; and certainly there is much to be gained by “going to gemba” in these areas.

However, while Waste Walks are most often put into practice within the above-mentioned areas, many that take place in other organizational areas have also proven to be extremely worthwhile, as we discussed with our Partners in Improvement groups.

For example, a supply chain management company used these walks as a way of solving a recurring order-processing problem that had become a hot issue with one of their mid-sized customer locations. They involved a number of their team members, including representatives from management, customer service and their CI group. It worked out so well that they now do Waste Walks at customer sites on a regular basis. Not only do the teams solve problems and make design changes in ways that benefit both parties, but their relationships with these customers have also grown significantly, which has boosted revenue and customer retention.

Based on the success of gemba or Waste Walks at customer locations, the company has recently started conducting them with suppliers, and anticipates similar positive results.

Other companies send their employees to observe how their own customers use their products and to look for complexities, errors, of troubles that the products cause the customers. Having done that, the employees are able to look at their own work through a different lens, and see more opportunities for Improvement.

In the retail sector, one company conducted a series of Waste Walks during their inventory season, watching and documenting the process at different stores. While some best-practices were certainly documented during the Waste Walks at the top performing sites, the greatest gains were made during Waste Walks at the stores in which performance was traditionally mediocre, where, as a result of the initiative, average cycle time was cut in half!

Even though Waste Walks are used less frequently in areas where the work is “less visible,” such as administrative offices, purchasing departments, and R&D labs, some of the greatest opportunities reside in these places. When the work is less visible, the Waste Walk team needs to ask many more questions of the people doing the work in order to learn what they are doing and to gain valuable insights

During one of our Partners discussions, CI leaders agreed with this perspective and identified some best practices for conducting a waste walk in an office environment, which included:

  • Communicating in advance with the people whose work will be reviewed, making sure to let them know the intent is not to take on a “big brother” approach, but rather to interact and learn from the workers themselves —the people closest to the work!
  • Communicating openly and in a “two-way” fashion during the waste walk. Administrative work can not really be understood by simply observing; the waste walk team must ask questions and engage in a bi-directional dialog with the office workers and thus learn about obstacles and challenges faced by those workers.
  • Focusing on the process rather than the tools. It can be easy to conclude that the best opportunities for improvement involve investing in new IT solutions or software programs.
  • Quantifying the opportunities for improvement and following-up with the office personnel afterward to share what was learned and to discuss specific steps for improvement.
  • Measuring gains and celebrating wins!

Performance Management Best Practices

Bill Conway would say that there are two things that matter: working on the right things and working on them the right way. Performance Management is all about how we as leaders orient our organizations around those two things.

When we asked our Partners In Improvement to define Performance Management, we heard a range of perspectives:

  • the strategic orientation of the organization
  • process performance management
  • setting of goals and objectives
  • individual performance appraisals
  • daily direction and feedback to reinforce desired behaviors
  • providing tools and coaching to help people be successful
  • rewards and recognition

From the strategic perspective, performance management begins with the identification of what’s vital to the organization. If these priorities are not clear and it is not clear what role everyone plays in the priorities, the rest is unlikely to mean much.

Several of the Partners pointed out that performance management refers not just to people management, but to process management, and plant management (which one of the Partners called the “3 Ps – People, Plant, and Process”).

One of the Partners explained that she always starts by measuring the performance of the process. To improve the process, based on the root cause analysis she would work to improve the people performance, tools, materials, methods, the environment, or whatever factor was driving the performance of a process.

While there are clearly a wide range of views about how to manage performance, several excellent points or best practices generated quite a bit of support during our discussions:

  • Performance Management must be about much more than individual performance measurement. As Deming said, over 90% of problems are caused by the system not the person. To manage performance, we must manage the system by which people, plant, process interact to produce results.
  • Frequent observation and feedback is more helpful to people than formal annual reviews.
  • Frequent communication about what an organization needs and wants greatly increases the odds that the organization will get what they need and want.
  • Group rewards encourage teamwork, while individual rewards encourage an individual to optimize his or her own goals even if it may sub-optimize the organization as a whole.
  • Tying money directly to performance appraisal can be a two-edged sword – raising stress and reducing the intrinsic rewards and personal satisfaction from doing a good job for the team.
  • Avoid performance management in the rear view mirror – in other words, avoid “Monday morning quarterbacking.”
  • Make more of the goal setting process which produces targets against which we measure performance and take corrective action

 

Why An 8-Step Improvement Plan?

While organizations in most sectors work at making at least some ongoing improvements to their work and work processes, most industries or vertical markets consist of leaders and followers.

People often ask about what makes the difference between the industry leaders and the follow-behinds.  In our experience, there are two things:

  1. What they work to improve
  2. How they go about the improvement

Industry leaders tend to “work on the right things,” which, as we’ve noted numerous times in this blog, is the most important decision we all must make every day. They also go about making improvements in an effective way. By working on the right things and following a proven effective improvement process, an organization can get further faster.

We recommend an 8-step process for studying and improving the work. While it is possible to make improvements in fewer steps, the more comprehensive eight-step process helps to ensure people are working on the “right” things, and also that the improvements will “stick.”

These steps are:

  1. Identify and quantify the waste you want to eliminate
  2. Clearly define what you want to do (including problem statement, objective, measurements, scope, team, and plan)
  3. Study and measure the current situation
  4. Analyze the root causes and evaluate and plan solutions
  5. Implement
  6. Study the results and take appropriate action until objectives are met
  7. Stabilize and standardize the improvement so that it stays in place and is used throughout
  8. Evaluate and learn from this improvement effort and plan the next

As noted above, some people think this seems like a lot of steps and wherever we go we meet people who want to “streamline” this process . We call them the “two-fivers” because the improvement process they follow is simply:

  • think of something they believe will improve things
  • implement it

Two-fivers eliminate 3/4 of the steps we recommend! Possibly a good, or at least workable idea… but the whole point of the eight steps is to make sure people are working on the right thing, that they get to the right solution, and that it sticks. If you can do without that, by all means, be a two-fiver.

It’s About Time & 5 Steps to Best Measure It

Our previous post shared several reasons as to why the measurement of time is an effective way to identify and eliminate waste.

This approach has consistently proven successful in our work, and some specific examples include:

  • A finance department used this method to reduce reporting cycle time by over 50% by identifying and eliminating the causes of rework.
  • An organization reduced setup times by measuring the time and addressing the causes of the non-value-adding delays.
  • A sales force measured their total time to value-adding time by identifying huge chunks of non-value adding time which they were able to convert to more sales calls.
  • A retirement community studied total housekeeping time relative to value adding time and reduced costs by over 30%.
  • A financial services company studied the total time versus value-adding time for processing time-sensitive transactions and succeeded in simultaneously eliminating both overtime and late
    penalties.

Once you’ve decided that managing time is an ideal way to reduce costs and increase customer (internal and external) satisfaction, you might try using the following five steps for effective measurement:

    1. Identify the process to study and improve: where it starts and where it ends.
    2. Confirm with the customer (internal or external) the key element of value the process yields. Sometimes this is obvious, but in some cases not so much. An accurate understanding of what the customer considers of real value is key to any improvement effort.
    3. Determine how long the process actually takes today. This number— in minutes, hours, days, or weeks, whichever is best suited to the process — is the TOTAL component of the ratio we will calculate in step 5. Some questions often arise at this step:
      • Should we collect “person hours” or elapsed time? Measure elapsed time. If you study and improve elapsed time, you increase customer satisfaction and quality as well as costs. Person hours spent on the work almost always decline when an organization focuses on elapsed time.
      • How precise do we need to be? It is valuable to get good data about the total time elapsed from start to finish, if only through a modest sample. Of course, there will be
        variation — and the variation can be quite substantial for some processes. Keep the raw data, and calculate the average TOTAL.
    4.  Determine which steps actually add value and how much time is spent on those. For a step to be considered to add value, it must:
      • Be directly related to what the customer values and would pay for (if they knew what we were doing)
      • Actually change something of value — the product, database, approval status, whatever, (inspecting something or moving something does not actually change the thing, so does not ‘add value’)
      • Do so for the first and only time. Fixing or reworking something does NOT add value, because it compensates for not being done completely or correctly the first time.
        Often these steps must be done today, because they compensate for an imperfection somewhere in the process. Correcting those imperfections is what will yield the improvements.

      What if we disagree about what is truly adding value? When categorizing work, aim to be as rigorous as possible about applying the criteria for value-added. If you mis-classify a non-value step as adding value, you will lose out on the opportunity to study and possibly eliminate all or part of it. But it is not a fatal mistake; you can always circle back. Once a group has eliminated a first round of waste, they are able to scrutinize what is left more rigorously and find a whole new round of opportunities that may well exceed the first round.

      How precise must we be about the amount of time the specific steps take? Knowledgeable approximations of the individual components that consume time are usually sufficient to
      produce really great improvements.

    5. Study the differences between the total time and the value adding time to identify and eliminate the root causes. Then calculate again. To calculate the ratio: if total time today is 55 hours and value adding time is 2 ½ hours, then the ratio would be either:
      • Total-to-Value: 55 divided by 2.5 = 22, which means that the organization spends 22
        hours for every 1 hour of value add, or
      • Value-To-Total: 2.5 divided by 55 = 4.5%, which means that 4.5% of total elapsed time
        is actually spent adding value.

      It doesn’t matter which you use, as long as you are consistent.

 

It’s About Time!

Our previous post focused on the value and importance of achieving “quick wins” when engaged in Continuous Improvement. Continuing with the theme of time, today’s post takes the concept of working on the right things to a different level,  and focuses on studying and more effectively using the most universal and, arguably, most valuable component of work and work processes: time.

When we are faced with the challenge of evaluating and improving a business, we have many metrics to choose from. We can ‘follow the money’ — study the spending: where does it go, how does it compare to previous periods or to competitors; we may look at market share or wallet share; we might measure revenue per employee or benchmark against the competition; or we might measure customer satisfaction or the customer experience.

But one of the most powerful measurements for helping to make breakthrough improvements is also one of the simplest: following where the time goes.

By determining how much time it takes to complete a cycle of value (i.e., building a widget, closing the books, making a sale, completing a project, etc.) and how much of that is truly adding value, an organization captures information that provides a motivating vision and road map for making improvements.

Key areas to study are: delays, over-processing, rework, transportation, and inspection; and using time as a measure to find and focus opportunities for improvement has three big advantages:

  1. time drives important business results
  2. time is universally applicable
  3. it is very simple to do — measuring time is something anyone can do!

Our next post will take a deeper-dive into the concept of measuring time, and will share some specific and proven methods for making improvements by studying the use of time.

 

Why “Quick Wins” Are Important to Your CI Effort

When it comes to Continuous Process Improvement (CPI), action is what it’s all about — thus the importance of “Quick Wins,” which require us to promptly move into action to get things done, measured, and stabilized.

A “Quick Win” must be completed in 4 to 6 weeks at most, but 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, or half-time for a week.

Because of the speed imperative, if a solution requires a significant capital investment, it is probably not going to be a “Quick Win.” If it requires a large team or cross-functional buy-in, chances are it will be a slow win if it succeeds at all. In fact, many “Quick Wins” do not require a formal team, but rather a natural work team can identify the problem and implement a quick solution. For a solution to become a “Quick Win” it 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 a number of related or consequential benefits associated with “Quick Wins” as well. For example, according to John Kotter, author of Leading Change and The Heart of Change,  “Quick Wins” are important because they:

  • build momentum
  • defuse cynics
  • enlighten pessimist
  • energize people

Conventional Wisdom & Specialization

Conventional wisdom is an asset in so many situations that one can hardly do without it. After all, it “makes sense!” Or at least it seems to make sense… and it can speed-up consensus and increase our confidence in our decision making.

But in a dynamic world when the underlying assumptions shift, we conventional wisdom easily lead our organization to make some big
mistakes.

For example, conventional wisdom holds that specialization is good. A person can get very fast and reliable doing the same thing the same way again and again. The classic example is Henry Ford’s assembly line which broke the complex craft of auto assembly into a sequence of very specialized jobs that could be easily taught to the relatively unskilled labor on the assembly line. Assembly line efficiencies put automobile ownership in reach of a much larger portion of the country and made the benefits of specialization a part of our national business psyche.

Specialization is applied to many jobs today as well, such as dividing a call center into teams of specialists by type of call, or dividing incoming orders so that one person handles all of the especially complicated jobs, or conversely, the easiest tasks may be pruned off and assigned to a junior person to exclusively handle.

When the volume and nature of the work flow is predictable, specialization can increase both efficiency and quality. But when the quantity, timing, or nature of the demand for work is uncertain, specialization significantly reduces efficiency!

For example, when a service organization wanted to speed up throughput and reduce overtime costs for processing new account applications for clients in the Financial Services industry, they organized their processors into different groups to handle different clients. This enabled each processor to complete an account
set-up faster because they could easily memorize the steps and forms for their small group of clients.

Nonetheless, the efficiency of the operation as a whole declined substantially. Variation in the incoming volume resulted in one group being swamped one day and working overtime, while another group was very slow.

So the rule is: sequential specialization, like the assembly line, often speeds up the mastery and execution of the subset of work, but will also reduce the total throughput whenever there is variation in the amount of time that a step may take. Each hand-off is an opportunity for work to be waiting for a worker or for a worker to be waiting for
work. When variation is low, specialization can increase throughput, but if there is variation in incoming quality or in the amount of time needed to execute a step, specialization tends to reduce efficiencies of the operation as a whole.

Six Pitfalls that Lead to “Discontinuous” Improvement

Many, if not most organizations make attempts to improve their work. But no matter which specific methods predominate, 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
  2. Then they peter out

For an organization to go through a cultural change so that continuous improvement becomes the new way of working (not just a one-time ‘program’), we need to pay close attention to the ‘soft’ part of the improvement model.

This will enable us to smooth the path, remove the obstacles, and continue to lead, communicate, and motivate both emotionally and intellectually.
Following are six common causes of discontinuous improvement:
  1. Neglecting aligning individual or team goals with those of the organization
  2. Insufficient communication between management, the workforce, project teams and CI leaders
  3. Delegating leadership, which is a responsibility that should stay with senior management
  4. Manager’s or Sponsor’s failure to remove obstacles
  5. Lack of quick success
  6. Letting-up on the “gas” when initial results are made