Continuous Improvement is a vital tool for insuring long term success.
I can’t tell you how many times I’ve heard the phrase “we don’t change very fast around here” from sign business owners. Usually I take it as a brush off tactic because it feels like they don’t want to talk about the nasty little six letter word called CHANGE. From what I see looking in with outside eyes is it appears what they really mean to say is “we don’t change at all around here!”
This is a big problem with the “Old School” owners in our industry and why there is such a disparity between the haves and the have nots. The progressive companies are laughing all the way to the bank, while the “we don’t change very fast around here” companies are treading water at best.
Granted they don’t necessarily have to change anything if it’s not broken, but thinking they are not affected by the world evolving around them or that they are immune to dis-ease in their own company are false expectations. Furthermore, I’ll bet they could make some changes right now that would greatly benefit the companies they own but they don’t know what to change or how to change. Everyone in the firm realizes it but them. The employees see it, the customers feel it and the bankers knows it!
At this point in the article lets shift from the term change to its friendlier counterpart called Continuous improvement.
One of my favorite quotes is: “An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” Jack Welsh
This can’t happen without embracing a culture of Continuous Improvement, a vital tool to insure long term success.
What is Continuous Improvement?
The Institute of Quality Assurance defines “continuous improvement (CI) as a gradual never-ending change which is focused on increasing the effectiveness and/or efficiency of an organization to fulfil its policy and objectives” …Put simply, it means ‘getting better all the time’.
When managing a CI company, you are on a constant lookout to improve the things that aren’t working while creating a better environment that makes the customer and employee experience more enjoyable with higher ROI’s to stakeholders.
A Continuous Improvement Culture company is all about living and breathing improvement in your day to day operations AND by everyone in the organization as part of the total effort from now till death do you part.
Without a CI mentality, owners start to do “complacent thinking”, assuming things are okay because that’s the way you have always done it, if it’s not broken it doesn’t need fixing. WRONG! You are setting yourself up for big surprise. All you need to do is look at recent history to be reminded that no organization is bulletproof.
Successful CI organizations share 5 things in common
- Goal Setting
- Systems
- Monitoring
- Reporting
- Involve everyone
- Goal Setting
Goals should be set based on the short and long-term objectives of the organization strategic plan with short-term being (3 – 12 months) and long-term (2 – 3 years). The two plans work together and are designed as a single strategy that is broken down into monthly and quarterly objectives. This keeps things in focus so teams can be accountable because they can relate better to visible “must outcomes” targets in “now term” action. When written down, tracked and managed the chances of success are increased exponentially.
Studies by Edwin A. Locke and his colleagues have shown that more specific and ambitious goals lead to more performance improvement than easy or general goals. As long as the person accepts the goal, has the ability to attain it, and does not have conflicting goals, there is a positive linear relationship between goal difficulty and task performance.
2. Systems
Dependable, well-managed systems and procedures make sure “good work” is performed the same way every time resulting in a predictable level of quality and with-in predetermined standards.
Some desirable traits of systemization are;
- Improved employee morale
- Management stress reduction.
- Minimize rework and overtime
- Dependable delivery schedule
- Increased profitability
- Improved receivables and cash flow
3. Monitoring
The main goal of monitoring things like time, materials, quality, and any other activity is to better understand what progress is being made towards a particular objective. The observations provide a basis for problem-solving or if things are going well the ability to exploit the positive thing you are doing to get even more of a desired result.
Key Performance Indicators (KPI) are a good way to keep focused on the things that matter the most. KPIs evaluate the success of an organization or of a particular activity in which it engages, they can be both tangible and intangible.
Accordingly, choosing the right KPIs relies upon a good understanding of what is important to the organization ‘What is important’ often depends on the department measuring the performance – e.g. the KPIs useful to sales will differ from the KPIs assigned to production.
Examples might be:
- Client loyalty & retention
- Number of rework hours.
- Average project duration days.
- Number of time loss accidents.
- Rate of securing new customers.
- Number of customer complaints.
As the saying goes, “you can’t hit a target you aren’t aiming for” in effect monitoring or measuring is a form of aiming and if you don’t know how or if you’re getting there you won’t be able to navigate the obstacles which are surely to get in your way.
4. Reporting
Don’t make this more complicated than it needs to be. I know too many companies that measure everything, they even have staff on the payroll just to count hours and widgets yet they don’t use the metrics to manage by. And if they do they won’t share the information with the line level contributors.
Keep it simple! You only need enough info to get the job done. Let the majority of your managers time be for doing the heavy lifting of working on your company by leading and strategy implementation, not to writing reports and long review meetings. That’s why the use of a scorecard format works so well. You can measure both tangible and intangible data very easily. The important thing is to make reporting quick & easy, to the point and consistent so people can make good decisions based on what the results are telling you not by ego, emotion or personal agendas.
5. Involve the Staff
As I mentioned earlier in the article, if you keep the data to upper management only. You are leaving out the people who can most likely give you the best results. Often times it’s the employees who are closest to the source.
You will also find they are as concerned about productivity and quality, as you are. They have a deep sense of pride in workmanship and a vested interest called “job security”. And the big kicker…getting more money isn’t necessarily their first issue, more often they want to have a voice and be heard where they spend the most time of any place in their life. At the office!
Leading without a Continuous Improvement culture is like fighting with one hand tied behind you back…it’s a losing proposition that will cost you more pain in the long run and certainly prevent an early arrival to your destination.
Why not be transparent and bring your team together? You will find more cooperation, better relationships and more profit in your pocket than you could imagine…something to think about.