People most often agree that the “hard” part of Continuous Improvement (CI) isn’t making improvements, but rather making it “continuous!”
In a past newsletter we entitled this reality as “Discontinuous Improvement,” noting that two things common to a high percentage of CI efforts are:
They produce some improvements
Then they peter out
For an organization to go through a cultural change so that “continuous” improvement becomes the new way of working and not just a one-time program, we need to pay close attention to the softer 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, which hopefully your organization can avoid:
Neglecting aligning individual or team goals with those of the organization
Insufficient communication between management, the workforce, project teams and CI leaders
Delegating leadership, which is a responsibility that should stay with senior management
Manager’s or Sponsor’s failure to remove obstacles
Lack of quick success
Letting-up on the “gas” when initial results are made
We have often referenced the importance of “amnesty” in the realm of Continuous Improvement. If people are not comfortable talking about problems and process complexities, either out of fear of retribution or criticism, then it will be impossible to achieve a high performing culture of improvement.
One place where the freedom to share opinions, observations or ideas is critically important is in project team meetings. In support of the above-stated position regarding amnesty, a recent Harvard Business Review article shares some excellent perspective on “making your meetings safe.”
In the piece, author Paul Axtell shares an excellent example based on input from a young engineer and his supervisor Josh. This engineer worked on several project teams within a manufacturing facility. His story is as follows:
“Josh, my manager, would take everyone out for pizza when he came to the factory, and we’d have a ‘no secrets’ meeting. Josh asked us about whatever he wanted to know and we did the same in return. It was a meeting where everyone had permission to say or ask anything. It was amazing.”
The article goes on to explain how the manager, Josh, used these meetings to discover how his team was doing, how their projects were progressing, and what they needed in terms of support and resources. He asked broad questions to initiate open conversation, such as:
What do you think I need to know?
Where are you struggling?
What are you proud of?
This approach is well-aligned with ours. When the people closest to the work are confident that their ideas or suggestions for improvements will be honestly considered without recourse they are ideally suited for engaging in true Continuous Improvement. But without the “amnesty” to speak their mind or share their observations, the organization is doomed to live in the “status-quo.”
As Axtell put it, “The quest for better meetings ultimately lies in leading with mutual respectful, inclusivity, and establishing a space that is safe enough for people to speak their minds.”
In the past 10 years we have seen an unprecedented acceleration of the rate of change, and you’ve probably heard people refer to the effect as “disruption” or “dislocation.”
“Disruption is when someone does something clever that makes you and your company obsolete,” says Craig Mundies, former chief of strategy and research at Microsoft, “Dislocation is when the whole environment is being altered so quickly that everyone starts to feel they cannot keep up.”.
Whether we are experiencing ‘disruption,’ ‘dislocation,’ or unprecedented opportunity, we have clearly moved into an era where the extraordinary becomes the expected and subsequently obsolete at an unprecedented rate. This acceleration of change has important implications for business — specifically for the organizational traits and capabilities that determine who will thrive, survive, or fail.
Thus “agility” has become a key component of sustainable success.
Many people say they would like to make their organizations more agile, but few organizations have a formalized strategy to do so.
For many leaders, the planning and management methods mastered on their way up the ladder were designed and effective in a different time, when change moved at a much slower pace. Others might lean more toward the entrepreneurial side, exhibiting high-levels of vision and enthusiasm, but not the team-building or other managerial skills necessary to develop a truly agile environment; and others may simply fail to stay the course.
To gain agility, today’s leaders must incorporate these four “agility enablers” into their operating model:
Fast and effective information flows so their enterprise can emulate Wayne Gretzky and “just skate to where the puck is going to be.”
Strong leadership and teamwork to turn insight into action; people at all levels must be engaged, involved, and accepting of ongoing change.
Relentlessly streamlined and simplified processes in order to handle the more rapid pace of implementation. If the processes that comprise the value stream are held together by patches, expediting, and human vigilance, or are full of inspection, rework, delays, over-specification, redundancies, excess inventory, complexity, etc. it will be very difficult to execute the necessary changes.
Flexible investments, as acceleration of change makes acquired assets obsolete faster, so both the investment and hiring strategy should reflect the need for flexibility.
As noted in previous posts, the start of a new year is often a time for making resolutions or strategic improvement plans, which is another way of saying “a time for change.”
As we all know, change is a critical component of growth and ongoing success; and, to be effective, change initiatives must involve not only a change in attitude, but also behavioral change.
But, as we also know, change is not always perceived as being good. In organizations of all types, people tend to look with skepticism at innovations and new methods, processes, policies and procedures; and people at all levels sometimes cringe at the suggestion that there might be a different or better way to do their jobs!
Yet without change comes stagnation and potential loss. Examples include: Converse in sneakers or Kodak in photography, each experiencing significant declines in market share and profits as competitors introduced new and improved, lower-cost alternatives.
Readiness… the Right Attitude The first step in any change effort is to help people develop the right mental attitude and understand that change is a constant part of long-term success. We have found that this “readiness for change” is best brought about through assessment, communication, education, empowerment, measurement, and recognition.
Components of helping people prepare for and embrace change include:
Making continuous improvement a permanent part of your corporate culture so that people at all levels change the way they think, talk, work, and act
Establishing new perspectives on work, work processes and value-added work
Clearly identifying the necessary or desired changes to actions and behaviors
Effectively using statistical tools to identify, analyze, understand and communicate variation and to measure improvement
Enlisting the help of people operating the work processes
Quantifying how continuous improvement benefits all stakeholders
Improving leadership and coaching skills that lead to increased employee engagement
Our previous post defined the concept of “value-added work” as being work our customers would be willing to pay for if they knew what we were doing. That post also noted it is common for 50% – 80% of all work within an organization to be “non” value-added!
Here are four ways to devote more resources to increasing the amount of work that is value-added within an organization:
1 — Work On The Bottlenecks When we work on many things that have a small effect, we will have a small impact. The way to increase value most substantially is to work on the bottleneck, or constraint. All improvement effort that is off the critical path will have a lower impact on increasing the value add. If the bottleneck can be widened even just a little, it provides a pure increase in value.
2 — Increase Understanding of And Alignment With What Customers Truly Value One of the biggest wastes is when the products or services we offer do not align perfectly with the customers’ needs and values. Errors are possible in two directions:
Bundling a feature into the product or service that the customers do not really need or want
Overlooking ways we could leverage our capabilities to solve a problem that the customers may not even have articulated to themselves
3 — Get At The Root Causes Replace the constant working on problems and symptoms with lasting solutions by drilling down to root causes. For example, the sales force of one company needed to better understand the value of additional services they could provide to customers. Rather than addressing the issue / opportunity in each proposal, they developed a calculator to make it quick and easy to help the customers (and themselves!) see the value provided by the additional services.
Another example is data accuracy issues in software that helps a company develop routes for drivers. Any error in the data input will create errors in the routes — inefficient or even impossible routes. The underlying cause is errors in the data input, but the root cause is somewhere in the process through which the correct data should be identified and entered. Studying the input process to identify where and how errors are made will help lead to and address the root causes and greatly reduce the amount of resources NOT creating value for the customers.
4 — Eliminate The Non Value Adding Administrative Work A great deal of time in most organizations is spent on emails, meetings, and reports that do not produce additional value for the customers or the organization. Finding ways to reduce email clutter, improve meeting management, and streamline reports are just a few examples of how this non-value-added work can be reduced or eliminated.
Satisfied and delighted customers are the lifeblood of any organization. Our professional lives are more rewarding when customers love what we do or provide for them.
Providing customers with the highest quality products and services at the best possible price starts with clearly understanding the customers’ needs and requirements and then designing and implementing processes that consistently deliver value. But there are two types of customers: • external customers • internal customers
It’s important to recognize that both types of customers are important and have needs that must be met. External customers are the people who pay for our products and services. As Dr. Deming said: “No customers, no orders, no jobs!”
Paying attention to the external customers’ requirements is essential and helps us keep the entire organization focused on doing value added work (i.e., “work the external customer would pay for if they know what we were doing”).
However, to effectively meet the external customers’ needs, we must also work with our internal customers. Understanding and meeting our internal customers’ needs and requirements helps the process of producing our product or service to flow smoothly, be problem-free and deliver the highest quality at the lowest total cost. When we work with our internal customers we are, in fact, “internal suppliers.”
Of course, this customer-supplier relationship extends to our external suppliers as well. From our external customer’s point of view, we are responsible for what they buy from us; and our suppliers are part of the system.
It is increasingly important to build strong customer/supplier partnerships that ensure that we get exactly what we need, in the right quantity, at the right price to be able to meet our external customers’ needs.
Studying Our Work to Improve… If we’d like to increase sales by improving our “sales” process, we should begin by studying our work. As a first step, identify our top customers’ 3-5 “must-have” requirements. As requirements are identified, it helps to understand their relative importance. What requirements does the customer consider “musts” versus “wants?” The chart below might help with the analysis of identifying measures we must track to determine how well we are meeting customer requirements.
Keep in mind that customer requirements are constantly changing as well, and yesterday’s “wants” may become tomorrow’s “musts.” So, we must continually analyze (and improve!) our work – paying attention to both “internal” and “external” customers, as indicated by the “Deming Cycle.”
Our previous post focused on building a high performing culture, and it noted that doing so is nearly impossible without significant contributions of time and energy from senior leaders. It was noted that a well-defined performance management process is a pre-requisite as well.
Performance Management is all about how leaders orient their organizations around working on the right things in the right way.
When we asked our Partners In Improvement to define Performance Management and to discuss how it impacts an organization’s culture, we heard a range of perspectives. Generally, everyone agreed that performance management a key driver of organizational culture because a well-defined and executed performance management process promotes effective prioritization, accountability, and engagement. However, definitions were more varied, and included:
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, the Partners said. 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 to both process management as well as people management. While there are clearly a wide range of views about how to manage the performance of both people and processes, several excellent best practices were generated during our discussions:
For example, everyone agreed that 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.
In addition, most reported that 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.
Everyone agreed that tying money directly to performance appraisals can be a two-edged sword – raising stress and reducing the intrinsic rewards and personal satisfaction from doing a good job for the team.
Everyone also agreed it was important to avoid what was described as “managing through rear view mirror.” In other words, avoid “Monday morning quarterbacking.” Instead, leaders should be involved in a systematic performance management process that is ongoing and timely so that outcomes can be influenced rather than discussed after-the-fact.
Here is a simple infographic that depicts one approach:
Since our inception we have stressed the fact that an organization’s leadership must champion a Continuous Improvement (CI) effort if it is to become cultural and if it is to succeed in a sustainable fashion.
Along similar lines, the Enterprise Engagement Alliance has shared data as well as experiences indicating the same holds true for engaging employees and customers; and just like a culture of CI, a culture of engagement generates a measurable return on investment.
“A CEO-led strategic and systematic approach to human capital management can enhance performance and create a better experience for all,” an article on the Enterprise Engagement Media website states.
“Without the leadership of the CEO, it is impossible for an organization to fully engage all its stakeholders in its brand, mission and goals—customers, employees, distribution partners, vendors, communities, shareholders, etc.—or to achieve measurable ROI.”
The Enterprise Engagement Alliance was the first to give a name to this strategic and systematic process to connect and align all stakeholders toward a common brand, mission, values, and goals, naming it “Enterprise Engagement.”
The point has been made, in prior posts, that “change” is not always perceived as being good, and instead tends to promote fear, uncertainty, doubt; and even resentment!
Consider that, in organizations of all types people tend to look with skepticism at new policies and procedures, and look with deep concern at new compensation plans or updated benefits programs. Similarly, in their daily quest for new customers, sales people constantly struggle to overcome buyers’ comfort with the status-quo; and people at all levels regularly cringe at the suggestion that there might be a different or better way to do their jobs!
Yet without change comes stagnation… and potentially worse things too. Current-day examples include Polaroid in instant photography, Blockbuster in video, Xerox in copiers, or the Yellow Pages! Each of these household name enterprises experienced significant declines, or worse, as competitors introduced new and better alternatives.
The cassette tape replaced the eight-track, but was then outdone by the compact disc, which was undercut by MP3 players… and the list can go on.
A Selling Mission… If we’re to learn from these examples, then we must accept the fact that change — either in the form of innovation, continuous improvement or both — is a critical component of growth and ongoing success. Without innovation and change we run the risk of losing our competitive position or potential obsolescence.
“Whatever made you successful in the past won’t in the future,” said the late Hewlett Packard CEO Lew Platt.
But if people tend to resist change as previously noted, how might managers or business owners best go about getting the team to accept it — to buy in? How can we help people more readily embrace improvement programs, try new protocols, accept new pricing models or generally believe in the up-side of change?
Simply stated, we must sell it.
Just like the sales and marketing experts who create the “new and improved” ad copy, slogans and selling presentations, we must sell the concept of change to our staff members before trying to present or roll-out new policies, procedures, campaigns, programs or plans.
And just like any sales mission, this will require forethought and planning.
We might start by identifying how the team will benefit from a proposed change. What’s in it for them? What are the consequences of not changing? What will it cost? What opportunities might we lose?
What’s the competition doing?
The next step is to determine how to properly position a proposed change. Since we know there is a tendency toward defensiveness, it’s important to make people understand that they are not the problem. In other words, a change in policy or approach need not mean that the team has been doing things the wrong way. Rather, it means the world is changing and we must change too, lest we fall behind.
Finally, once the presentation is made and the new whatever is launched, there must be follow-up reinforcement and assessment. Has everything worked as we’d hoped? Should we modify the new plan? Are there unforeseen consequences? While we don’t want to send a message indicating we’re not resolved to the new program or approach, it is also a good idea to let everyone know we’re fair and open-minded — that at the end of the day we’re all on the same side.
Change may be unsettling, but without it our futures are at risk; and there are clearly ways to minimize the negative effects. It will require effort, planning and, like any selling mission, persistence, as behaviors and attitudes are not easily influenced.
Margaret Thatcher may have summed it up best when saying, “You may have to fight a battle more than once to win it!”
It has happened to most of us. Has it happened to you?
That is, has there been a time when data supported a decision you knew to be the right one, but for some reason or reasons you did not get the outcome you expected?
Perhaps you find an exciting investment opportunity like the winners you have spotted before, but it yields mediocre or poor results. Or despite your experience and successful track record when judging candidates, a person you just “knew” would be a good fit turns out to be a bad hire.
With experience can come wisdom… but also confirmation bias.
Confirmation bias is the tendency to pursue and embrace information that matches our existing beliefs. We tend to seek out and enjoy people who write or say exactly what we think. We gravitate toward these sources not for information but for confirmation.
Researcher and writer Thomas Gilovich posits the “most likely reason for the excessive influence of confirmatory information is that it is easier to deal with cognitively.” It’s easier to think what we think!
Yet confirmation bias in business can be especially hazardous and costly to highly-experienced and successful individuals. These minds are adept at spotting patterns, learning from experience, scanning the horizon and connecting the dots. If that describes your talents, take a look at this classic puzzle nicely presented by the “The Upshot.”
If you attempted the puzzle, how did you do?
For those who opted out, in this puzzle participants are given a numerical pattern and are asked to determine the underlying rule. The pattern is quite simple, and participants can test their theories as often as they like before specifying the rule. Yet 77% of participants fail to identify the rule because as soon as they find a pattern that supports their theory they conclude it is the correct rule.
In other words, 77% of participants succumb to confirmation bias.
This is a common occurrence in business. When trying to solve problems or make decisions we overwhelmingly look for patterns that support our theories rather than looking for data that would clue us in that we have missed the mark. And with each piece of data that does not refute our theory, we become more confident in our belief.
This exercise shows how people tend to work at proving their theories right, instead of robustly testing the theories to prove them wrong. Once we have seen enough supporting evidence to confirm we are right, it is far more natural for us to fully embrace our premise or idea.
For instance, maybe we are tasked with determining why a certain work process is not being done well. Is the work done less well by inexperienced employees, or when the machine is overdue for maintenance, or when the materials have a certain characteristic?
We could test all three of these ideas with data. But our natural confirmation bias makes us far more likely to look for evidence that the idea we favor is correct than to look for ways it may be mistaken. So, we start testing the idea we think is most likely and as soon as we find enough evidence to support it, we risk diving into the solution and excluding the other possibilities; and we could very well be headed down a path of action that is sub-optimum for our organization.
In our next post we’ll take a closer look at examples of confirmation bias in the workplace and steps that can be taken to avoid it.
Challenges and best practices associated with continuous improvement