Building and Sustaining a Continuous Improvement Program

Introduction How’s it working for you? Here’s a challenge: Find a strategic plan or business model that doesn’t mention process improvement or transforming the organization. Lots of luck. Successful businesses and organizations pride themselves on finding ways to do things better. For all the emphasis on process improvement -- how have we done in practice? Consider these excerpts from a McKinsey study: [Improvement] savings are often fleeting…by year four fully 90 percent of costs are right back where they started. … Sweeping, top-down cuts…can unintentionally lower the effectiveness of back-office services. ... To capitalize on the potential for improvement and make changes stick, executives must also consider effectiveness…[and] probe the root causes of performance deficits to learn where lean and other process-improvement techniques might be advantageous. "Why Don’t Back-Office Efficiency Drives Stick?" Jan 2010, McKinsey Quarterly Also Note: A recent webinar polled a group of shared services leaders and >80% stated they do continuous process improvement; only 10% were very satisfied with results, 50% were somewhat satisfied and the rest were dissatisfied. But surely this isn’t the case with tried and true initiatives such as Lean or Six Sigma? Well, read these recent comments from the president of the Center for Excellence in Operations: Benchmarks indicate that over 80% of Lean & Six Sigma deployments are unsuccessful, following the same trend of improvement programs over the past three decades. … The present approaches to Lean Six Sigma and strategic improvement in general are too slow, too overhead intensive and ineffective at achieving quicker results. … Training the masses and Belts is the wrong approach in the new economy. …Over three-quarters of individuals certified as Black Belts are no longer involved in formal improvement initiatives. Terence Burton "Put the ‘continuous’ back in improvement," Six Sigma and Process Excellence, Jan 2011 The evidence isn’t positive, both in terms of getting results and the techniques and processes being used. But are there some things that do work? What do the Wright Brothers have to do with it? Why did the Wright brothers succeed when so many others failed? One historian discussed the fairly simple answer. Most everyone at that time watched birds and wind patterns in an attempt to discover the mysteries of flight. While many concentrated on mimicking wing motions or building more powerful engines, the Wrights focused on understanding the basic principles of flight and control. (click here to see a short video of early flight failures) They felt that once these principles of aviation were deciphered, success would follow – and history proved them right. Flying didn’t require flapping wings or super-powerful engines, but rather an understanding of the principles and the inter-relationship of lift, drag, gravity and thrust. Once these principles were mastered, building a flying machine became much simpler and the aviation industry was born. The same concentration on principles holds true with continuous improvement and most other business techniques. Discover the basics and your chance of success skyrockets. Keep reading for the basic principles we’ve discovered -- hopefully these will help you learn to fly. CFO Perspective – The Big Picture Deborah Meyers, CA, CFO, Calgary Board of Education As already mentioned, almost every organization these days refers to Continuous Improvement ("CI") as a goal or objective, but I often find that when asked, they haven’t identified specific strategies to accomplish that goal. Instead, they focus on evaluation processes – "How well did we do?" or "What would we do differently next time?" These "lessons learned" exercises are important and imply an expectation for improvement. However, they only go so far and are usually applied to project-oriented work rather than the workflow and business processes inherent in an organization’s product/service delivery. Regardless of what framework, methodology or techniques you use, without identified strategies to support CI, its priority within your organization is questionable at best and lip service at worst. Is there one best strategy to implement CI? Probably not; but based on my experience with the implementation of CI in three different public sector environments, six decision areas help establish the foundation for success in any organization. 1. Is the organization ready to implement? Typically, CI focuses on continuously and incrementally improving everything associated with designing, creating and delivering to meet customer needs. It presumes certain basics for success are in place, including: • A clearly communicated vision for the organization • A strong focus on your customer at all levels • Employee alignment and embracing of the vision – a clear line of sight There is no sense in developing CI strategies to fine-tune work without these three basic foundations. If you do, you run the risk of CI work being at cross-purposes with the organization’s vision because of misunderstandings and misinterpretations. On the bright side, however, in such circumstances CI will probably highlight the existing confusion over the organization’s strategic direction! When it comes to innovation and change an organization must be focused on both "doing the right thing" and "doing the right thing well." Doing the right thing is about the "Why" and "What" of an organization –the vision, goals, products and services, respectively. Doing the right thing well concerns the "How" of an organization -- continuous improvement. An organization must have coordinated strategies to address both perspectives. There isn’t much value in effectively delivering the wrong product/service. 2. Is continuous improvement an initiative or a culture? Viewing CI efforts as a strategy to change organizational culture will go much farther than mandating change as a project. A project has a beginning and an end and is contrary to the concept of "continuous." Instead, focus on injecting CI into the organization’s work culture as a pro-active tactic, rather than viewing improvement as a reactionary tactic. This can be accomplished directly by: • using "Train the Trainer" approaches that transfer CI knowledge and tools in- house • developing simple and repeatable CI processes that can be injected into the organization’s annual management process 3. Do you subscribe to the "Big Bang Theory"? Big Bang (i.e. transformational or "breakthrough") change can produce dramatic results, especially if the change is made by a single or a few individuals. However, if it requires the sustained involvement of a large number of people, then Big Bang change may be difficult to sustain. Consider what happens when improvement is mandated and enforced by a single individual and that individual leaves. Does the change carry-on, or does it die, with things reverting back to the old ways? Typically, the latter. While incremental change may be less dramatic when carried out by many people over time, it has a far greater chance of lasting success. An incremental approach, leveraged by a culture of CI, will typically outperform discreet, major change because: • There is no incentive for implementation delays while folks figure out the "very best way." Big Bang change means long periods between change windows. With continuous attention to change, improvement windows are frequent, so there is room to proceed with interim steps. • Continuous change provides agility and the opportunity to try creative solutions at reasonable risk levels. Failure doesn’t result in massive expenses if you choose a solution that ultimately doesn’t work. • The quick feedback loops required in continuous improvement processes inform the next improvement – ultimately, improving overall results far more efficiently than feedback loops on breakthrough projects with long periods between change windows. • Discrete responses for improvement foster a false sense of stability -- implying that you can hold things constant until it is time to change again. Such an attitude is unrealistic in today’s fast-paced environment. I equate continuous change with taking baby steps and learning to walk before you run. 4. Is CI a body of work or is it embodied within the work? CI as a body of work is often seen as a separate function with its own objectives and business plan. If it is embodied within the work of the organization, then every area has a CI aspect to it. Two dimensions you need to consider: • Do you hire consultants to do all the work, or do you involve your own people? While external reviews have their place, they will not contribute to establishing CI within your organization, unless the consultants are required to pass on their techniques. Staff empowerment and engagement are key to CI’s success. • Do you set up a CI Department within your organization structure? On the positive side, identifying CI within the organizational structure signals its importance and demonstrates commitment. As a separate department, it will have business plans that demonstrate measurable strategies to meet its goals. On the downside, it may imply that CI is a specialty, requiring distinct skills, and even more problematic, that CI is the responsibility of that department only. Successful CI rests in a culture where every employee is accountable for constantly seeking to improve how their work is performed, adding value, and contributing to the successful achievement of the organization’s goals. All you need do is give them the time, techniques and tools to make it happen. If you plan to establish a CI Department, focus its objectives on training staff in CI skills and techniques and developing repeatable processes for use throughout the organization, rather than solely performing CI reviews themselves. 5. Specialist "hard" skills versus "soft" skills? While CI is often perceived as requiring special "hard" skills, I suggest that it requires a balance of both "hard" and "soft" skills. "Soft skills" are traditionally those people skills or behavioral competencies having to do with how people relate to each other and manage relationships. CI involves managing how our work relates to the work of others, the quality and value of our work, and the contribution we make to meeting our customers’ needs. Even though CI focuses on "process to process" relationships, soft skills still play a key role. Examples of the soft skills that support successful CI are: openness to change, questioning the status quo and creative thinking. While CI techniques and tools (i.e., "hard" skills) are important, I believe it is behavioral competencies that make a difference. If staff do not have a "CI state of mind" and the related soft skills, having the CI tool kit will be pointless. A tool kit is an important component of proficiency, but only to the extent that it supports staff in looking at their work from a CI perspective. 6. Are cost and performance separable? Private sector organizations have a strong focus on the relationship between cost and performance, typically with lots of data and metrics. The cost-performance relationship is instrumental to operational success, thereby increasing the importance of budgets and costs to all managers. In the public sector, the relationship of cost and performance is usually weaker. Work is often not considered a business, but rather a public service and therefore you can expect some resistance as you introduce the business concepts inherent in CI. I am certainly not saying that public servants aren’t concerned with costs and performance, but it is important to ensure that understanding cost is seen as every manager’s responsibility. The communication strategies will be different for each environment. Regardless of public or private sector focus, cost and performance should be linked for effective CI implementation in improving value. Getting the organization to look at value in such terms might seem straight forward, but very often people have never included the impact of processes and productivity in their value equation. The notion that value can be impacted by either cost or performance (including both quality and productivity), and the importance of understanding costs may be a significant shift for those traditionally concentrating solely on service. This may require focused communication and even careful use of terminology. The above six points summarize key strategic decisions that you need to consider when implementing CI within your organization. Once you have dealt with these, here are some of the tactics I have found that work best: • Ensure that you have CEO sponsorship and support and actively leverage this. • Use a "train the trainer" approach. Engage external consultants to provide training to an internal team. The internal team is temporary and its objective is to transfer the knowledge and techniques to the rest of the organization. • The internal team should be a combination of skill sets – not just Finance. The more your team members understand the core business, the better. Some have suggested that the Internal Audit Group is a good place for CI. I would tend to disagree since internal audit is mainly focused on controls, which can raise conflicts when considering efficiencies. • Use a quick and easy process that demonstrates value to managers. • Provide a simple set of repeatable processes to support CI behavioral competencies. • Keep it simple and remember the 80/20 rule. Don’t go for perfection. • Consider developing a CI community of practice. • Measure and communicate successes. Communicating the achievement of recognizable benefits is essential to gain both the momentum you need to develop the CI culture as well as ensuring that the CI efforts merit continued resourcing. Consultant Perspective – Tactics and Techniques That Work Andrew Muras, BAE Systems, Systems Engineering Services You’ve worked through some of the key strategic decisions mentioned above. Now, what are some of the ground-level tactics needed to successfully implement continuous improvement? Following are a few to consider for establishing long-term success. 1. Successes with "train-the-trainer" Imagine taking teens, drop-outs and graduates alike, of all different age groups, backgrounds and technical know-how, training them on your most complex systems and processes and within a few months putting them in front of your most problematic customers. We might roll our eyes and say impossible -- but that’s what the U.S. Army, one of the world’s largest training organizations, does, on a year-in, year-out basis. Sure, we’re not training for military conflict, but might we use some of their time-tested ideas? One fundamental tenet of Army training is a three-pronged approach that incorporates the basic principles of how adults best learn: an integration of self-development, institutional/class-room learning and operational/experiential learning. You might consider this approach the next time you attempt to train a team (e.g., a continuous improvement team) or want to incorporate a train-the-trainer approach in your organization. First, provide materials that allow individuals to read and study on their own. This not only benefits those that process information internally, but also provides reference materials later when needed. Next, conduct classroom sessions with expert facilitators to train on fundamentals. Such sessions are a time-tested approach for transferring knowledge, plus it allows questions and mistakes in a safe environment. Finally, and as soon as possible, internalize the learning with real experiences/live environments that generate useable results. This is somewhat of a ‘sink-or-swim’ approach, though you greatly reduce the risk of failure by having the experts with the team during the first few events, and then available ‘on call’ afterwards, as needed. Complete these steps and your train-the-trainer efforts will prove fruitful. 2. No single religion A recent blog from the Harvard Business Review compared process improvement with religious zealism, as many organizations tend to adopt one exclusive approach to improvement. The problem? "No single [method] has all the approaches for sustaining organization attention to improvement … A few companies that lead in sustained process improvement have drawn from the best of each [process improvement method] to embed continuous improvement in their organizations." (Uniting the Religions of Process Improvement, blogs.hbr.org, Mar 7, 2011). Consider this integrating approach when implementing continuous improvement. Most every process improvement initiative tends to tackle a cost, quality or timeliness issue. These three issues also link well with the primary process improvement approaches of activity-based management (ABM), Six Sigma, and Lean, respectively. An integrating approach allows you to lead with one of these three improvement approaches and use elements of the other two as necessary for completing the work. No exclusion here. So, how do you determine which to lead with? Simple – what’s the root problem you’re trying to solve? Is your client concerned with costs issues, e.g., service costing, reducing costs, and chargebacks? Lead with ABM. If clients highlight quality issues associated with errors and metrics, consider Six Sigma approaches. If process speed and cycle times are of upmost concern, Lean and value stream mapping might be the preferred choice. These three techniques (ABM, Six Sigma, Lean) form a triangular, and integrated, approach to process improvement. In today’s Web 2.0+ and social networking world, where knowledge transfer and sharing is becoming a critical competitive advantage, you might also consider a fourth element, that of knowledge management (KM). As my first grader told me when she saw this ‘triangle of process improvement’ on my computer, "Daddy, that’s a tetrahedron." 3. It is all about the process Evaluating our daily processes and work activities seems obvious – after all, we are discussing process improvement. However, this focus often gets lost among discussions of people, culture, outsourcing and many other issues. Ultimately, all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell and deliver their products or services. Differentiation arises from both the choice of activities and how they are performed. Michael Porter, "What Is Strategy," HBR, Dec 1996 Just remember that a relentless focus on understanding, quantifying and improving our everyday work activities is paramount; for the processes we perform are often what set us apart from others. What we choose to do or not do, what it costs and how long it takes – all of these tell us whether we’re doing our work better than others and what we should concentrate on improving. Following are some of the principles associated with a relentless focus on process: • The structuring and control of activities to meet customer needs is the key to competitive advantage. Our activities are what produce outputs, products and services. • The only effective way to manage cost is to control the activities that consume resources, i.e., budget. Understand and quantify your activities and you’ll know where your costs are going. • Activities and processes must be continually analyzed, changed, and improved to maintain competitive advantage. Technology improvements never take away all work, it just transitions to different types of activities, i.e., even if a Star Trek-type future awaits us, the need for process improvement will never go away. • Those who actually perform the work (activities) have the best understanding of how to improve the quality and cost of the activity. Your people just need the time and a way of quantifying and expressing their knowledge. • In order to improve activities and processes, people must be empowered to change the way they work. If you value your people and want engagement, get them involved. In particular, note the last two bullets. While processes are key for any improvement initiative, we must keep in mind the underlying priority of people. Your people are the ones working the processes and keeping your organization functioning. Engaging them meaningfully will not only improve the results and recommendations from your project, but also dramatically increase your chances of success. 4. The basics of simplicity and value – why argue with Einstein? Buying electronics can be a nightmare these days. Whether it’s a flat screen TV, smart phone or camera, the choices are overwhelming. One way to decide is to simplify the scenario by drastically narrowing your choices, e.g., get a recommendation from a trusted friend/advisor or lay out your ‘real’ requirements. It is a simple thing to make things complex, but a complex thing to make things simple. Albert Einstein Note: Imagine summing up the complexities of relatively with the simple equation, E=mc2 A similar sense of overwhelming occurs in process improvement. The choices of what to do and where to start can be as endless as a wall of TVs at Best Buy. The complexity can drive you to indecision or, worse yet, endless analysis. How do you simplify? Here’s one technique. Consider that at every decision point – and there can be hundreds when you’re involved in larger projects – first ask yourself, what’s the simple solution? What can I do now that meets most of the requirements and can be done relatively quickly, i.e., the 80/20 rule? At a future point you can always choose to implement something more complex, be it a system, type of analysis or implementation plan. Truth be known, I often find that the eighty percent solution addresses most issues. And then there’s the question of value. Try discussing continuous improvement with managers or consultants and not use the words ‘value-added’ or ‘non-value-added.’ Dilbert devotees could have a field day with cartoons. While we might laugh at the consultant-speak, the ideas of value-added and non-value added (NVA) are actually extremely relevant, AS LONG AS everyone understands what they mean and how to use them. Identifying and quantifying NVA can be one of the most useful tools for continuous improvement, for it provides a compass, showing what to improve and where to start. Here’s a two-part definition for value and NVA. In deference to Einstein, the first is a simple equation, Value = Performance/Cost. To increase value, you raise performance, lower cost, or some combination of the two. NVA is just the opposite. If you can quantify both performance and cost, this equation becomes a powerful pointing tool. Second, and borrowing from Lean terminology, is the idea of whether a customer is willing to buy it. For example, if you listed all the activities and services your organization provided during a typical day, and had unit costs associated with each, would your customers be willing to check the block and say ‘yes’ to buying each activity or service. If yes, then it might be value-added. If no, it might be NVA. Why is it so important to have a clear definition of NVA? Easy. The first time you show results that quantify x% of a process or budget as NVA, management immediately wants to cut the budget by that amount. However, this is not what NVA means. Instead NVA points to opportunities for improvement. Before any budget modifications can be considered, some type of change or improvement must be implemented. 5. FastTracking for continuous improvement The triangle (or tetrahedron) of practices identified previously (ABM, Lean, Six Sigma, KM) are all useful for evaluating and improving organizational processes. However, I often find myself leading with ABM, particularly for shared services. Why? Simple. Most shared services issues and initiatives seem to involve cost (cost reduction, pricing and chargebacks, service catalogues, etc), and ABM excels at quantifying costs and linking budgets with processes and organizational initiatives. "The people who have been doing continuous improvement successfully for some time are the first to acknowledge the management team of a company is not where the improvement ideas come from; it’s from the operations side, where the customer value is being added, that the most effective ideas originate." Industry Week, Apr 2008 The FastTrack approach we use incorporates elements of ABM, Lean and Six Sigma (and lays the groundwork for KM) and has a twenty-year history of success. FastTrack itself won’t be described here, but rather the principles that have made it successful. For those wanting additional detail on the actual FastTrack process, plus dozens of published case studies and the free web tool, go to www.fasttrackabm.com. FastTrack’s principles of success are centered on speed, simplicity, ease-of-use, repeatability and involving the people who do the work. Specifically, six tenets, all of which support and reinforce adult learning and engagement, include: • Get results quickly. The entire FastTrack process and reporting period is complete within one to two weeks. • Use workshops for employee engagement and building group consensus. FastTrack uses a series of 3-hour sessions with those who perform the work (i.e., not necessarily the managers) to develop the data and recommendations. • Include train-the-trainer techniques to build internal expertise. Encourage knowledge transfer from the experts to those who will be continuing the work of process improvement. • Focus on actionable results. Data and recommendations should be easy to understand and provide a straightforward implementation path. • Incorporate adult learning techniques. Facilitated discussions, rapid & continual feedback and ownership of data – all help in building group consensus and aid in future change management. • Limit upfront investment in systems or data. For example, FastTrack’ web-based tool is free, easy to learn and allows the project to get up and running quickly. Again, you don’t have to use the FastTrack process or tools for process improvement. However, I would encourage you to incorporate these six principles, along with the ideas in the ‘How to Fail/How to Succeed’ chart, below, into any continuous improvement project. Summary Master the Fundamentals Most sports coaches can agree on one thing – master and repeat the basic fundamentals if you want to succeed. Football has blocking and tackling. Baseball has pitching and defense. Golf pros maintain a steady head. Each sport has its own approach, with a common theme that most successful players and organizations are fundamentally sound. Vince Lombardi, the Wright Brothers, Jack Nicklaus, and countless others, all knew that mastering the fundamentals breeds success, and this takes both practice and a game plan. Hopefully we’ve provided you with the fundamental principles for practicing successful continuous improvement. As for the game plan? We’ll end this article with the following four steps to consider when beginning any project: 1. Define the problem you’re trying to solve. Limit to one or two sentences AND identify how you’ll know if you’re successful. 2. Know your end point. Can you develop a single chart that shows your end product? 3. Keep it simple. You can always add complexity later as needed. 4. Produce quick wins. Nothing builds momentum like getting that first score. Good luck! [eventpdf] Deborah Meyers is CFO for the Calgary Board of Education (CBE) where she implemented a continuous improvement program. Her past experience also includes CFO for Shared Services at the Province of British Columbia where she implemented a continuous improvement program using the above principles and FastTrack that is still operating over eight years later. Ms. Meyers has also run numerous successful consulting practices. She can be reached at: dlmeyers@cbe.ab.ca. Andrew Muras is Senior Manager of BAE Systems’ Systems Engineering Solutions and is responsible for developing and implementing performance management, knowledge management and business solutions for both industry and government organizations. He teaches various courses and workshops in performance measurement and process analysis techniques across North America. Mr. Muras has published a book, Process Improvement and Performance Management Made Simple, www.simpleprocessmgmt.com, and dozens of articles. He can be reached at: andrew.muras@baesystems.com

Building and Sustaining a Continuous Improvement Program

Upcoming Events

Shared Services & GBS Select Executive Leadership Summit

Shared Services & Outsourcing Week

Unlocking $30 Million in Cash Flow: Konica Minolta’s Full Cycle F&A Transformation

The New 9-to-Whenever: What Office Meal Trends Reveal About the Modern Workplace

The Real Journal Automation Gap: Why Posting Is Solved but Creation Is Not

The Top 5 Priorities of Forward-Thinking CFOs in Midsize Businesses

Follow Us

Latest Webinars

Redefining Finance Value: Key Insights from SSOW Europe 2026

Avoiding Buyer’s Remorse in E-Invoicing Compliance

AI-Driven Invoice Automation with Basware’s Invoice Lifecycle Management

Recommended

Egypt: The Next Country North American Shared Services Should Consider IT and Bu...

How Do Sourcing Objectives and Criteria Determine the Sourcing Approach ?

The Outsourcing “Conundrum”: Securing the Benefits You Expect

EP17 The critical link between digital transformation and GBS (Global Business S...

BPO = Business Process Outcomes [not Business Process Outsourcing]

5 Ways Your Business Process Management System Could Be Failing Your Back Office

"Parts Is Parts" - The Key to Differentiating Yourself

Tech Demo: Accelerating Invoicing to Overcome Workload, Speed and Regulatory Cha...

What Will Save BPOs?

Shifting to SaaS may not eliminate the “Technical Debt”

Offshore Engineering R&D Centers Will Continue to Flourish in Current Crisis

Play Nice, Outsourcing Providers. There will be life after COVID-19

FIND CONTENT BY TYPE

SSON COMMUNITY

ADVERTISE WITH US

JOIN THE SSON COMMUNITY

Building and Sustaining a Continuous Improvement Program

Upcoming Events

Follow Us

Subscribe to our Free Newsletter

Latest Webinars

Recommended

FIND CONTENT BY TYPE

SSON COMMUNITY

ADVERTISE WITH US

JOIN THE SSON COMMUNITY