It’s Time to Rethink Continuous Improvement

Years ago, Jon Katzenbach told me that the greatest challenge that change agents face is changing their ideas about change. The Japanese term for continuous improvement is kaizen (改善) and was probably introduced when Edgar McVoy convinced Lowell Mellen to join him in Japan to properly install the Training Within Industry (TWI) programs in 1951. It is most widely associated with the Toyota Production System (TPS), a major precursor of the more generic “lean manufacturing.” Taiichi Ohno, Shigeo Shingo and Eiji Toyoda developed the system between 1948 and 1975.

Here is an excerpt from an article written by Ron Ashkenas for the Harvard Business Review blog. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.

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Six Sigma, Kaizen, Lean, and other variations on continuous improvement can be hazardous to your organization’s health. While it may be heresy to say this, recent evidence from Japan and elsewhere suggests that it’s time to question these methods.

Admittedly, continuous improvement once powered Japan’s economy. Japanese manufacturers in the 1950s had a reputation for poor quality, but through a culture of analytical and systematic change Japan was able to go from worst to first. Starting in the 1970s, the country’s ability to create low-cost, quality products helped them dominate key industries, such as automobiles, telecommunications, and consumer electronics. To compete with this miraculous turnaround, Western companies, starting with Motorola, began to adopt Japanese methods. Now, almost every large Western company, and many smaller ones, advocate for continuous improvement.

But what’s happened in Japan? In the past year Japan’s major electronics firms have lost an aggregated $21 billion and have been routinely displaced by competitors from China, South Korea, and elsewhere. As Fujio Ando, senior managing director at Chibagin Asset Management suggests, “Japan’s consumer electronics industry is facing defeat. “Similarly, Japan’s automobile industry has been plagued by a series of embarrassing quality problems and recalls, and has lost market share to companies from South Korea and even (gasp!) the United States.

Looking beyond Japan, iconic six sigma companies in the United States, such as Motorola and GE, have struggled in recent years to be innovation leaders. 3M, which invested heavily in continuous improvement, had to loosen its sigma methodology in order to increase the flow of innovation. As innovation thinker Vijay Govindarajan says, “The more you hardwire a company on total quality management, [the more] it is going to hurt breakthrough innovation. The mindset that is needed, the capabilities that are needed, the metrics that are needed, the whole culture that is needed for discontinuous innovation, are fundamentally different.”

So should we abandon continuous improvement? Absolutely not! It has created tremendous value and still drives competitive advantage in many companies and industries. But perhaps it’s time to nuance our approach in the following ways:

[Here is the first of three suggested modifications. To read the complete article, please click here.]

Customize how and where continuous improvement is applied. One size of continuous improvement doesn’t fit all parts of the organization. The kind of rigor required in a manufacturing environment may be unnecessary, or even destructive, in a research or design shop. Sure it’s important to inject discipline into product and service development, but not so much that it discourages creativity.

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Ron Ashkenas is a managing partner of Schaffer Consulting and a co-author of The GE Work-Out and The Boundaryless Organization. His latest book is Simply Effective.

 

 

Uniting the Religions of Process Improvement

Brad Power

Here is an excerpt from an article written by Brad Power for the Harvard Business Review blog (March 7, 2011). To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

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When they set out to turn around processes that have become woefully inefficient or ineffective, most companies choose one of four process improvement “religions”: Lean, Six Sigma, Business Reengineering or Business Process Management (BPM).

After hearing about its success at another organization, many companies choose just one. For example, several companies embarked on Six Sigma programs after their CEO heard about GE’s success with the approach, and many other companies have adopted Lean because of Toyota’s success.

It’s like adopting a diet or exercise program that a friend has used and lost 50 pounds.

But some companies realize they need to go beyond making episodic improvements. They try to institutionalize process improvement — that is, put in place the right mechanisms in their management systems so that their business processes don’t become grossly unproductive in the future. That is, they try to build continuous improvement into their DNA. It’s like the difference between going on crash diets every two years and fundamentally changing one’s eating and exercise habits.

But moving from episodic process improvements to having the wherewithal to improve processes continually is a tall order because of five key challenges I highlighted in a previous post: competing demands for attention, competing mindsets and behaviors, strategic irrelevance, traditional management processes, and the pain of disruption.

If an organization tries to institutionalize process improvement based on the tenets of just one process religion, it will run into trouble because no single religion has all the approaches for sustaining organizational attention to improvement. Lean has the most complete set of approaches for continuous improvement among the four religions. But a company that embeds Lean thinking into its DNA may occasionally need the hard financial results that Six Sigma can produce. In addition, Lean converts have a predisposition against adopting large, centralized IT solutions, which may cause them to ignore useful approaches from the BPM religion.

The result: Organizations need to consider every possible approach, not just those offered by one religion. To stay with the diet and exercise analogy, being aware of multiple diet programs will help you pull out common themes and arrive at a tailored program that works best for you.

Consider this example. Many companies adopted Six Sigma in the late 1990s. They trained experts in improvement projects (“Black Belts“) who then drove initiatives that achieved large financial results. In some of these companies, senior managers were dubious about the claims. They suspected there was some backsliding or double counting because the results were almost too good to be true. Many of those organizations then embraced Lean for different set of tools for improvement projects, tools that helped them connect project results to key strategic measures. They also stressed organizational learning (meaning, capturing the methods of Lean so that other parts of the organizations could adopt them). Adding another religion helped these companies embed continuous improvement into their DNA.

If organizations want to keep their processes up to date continually, they need to be able to use many approaches to embedding improvement in their management systems. Let’s review the distinguishing features of what each religion has to say about sustaining improvement.

1. Six Sigma zealots say “Belts,” lots of training, and performance measures are what matter.

Motorola pioneered the Six Sigma statistical tools, but it was GE that built the training programs and the hierarchy of accreditations or “Belts” (Green, Black, Master Black) with which it is so strongly associated. People who have earned these belts drive projects with clear financial targets set at the top organization, with progress monitored by the CFO. Six Sigma zealots argue that if you train enough people, you get a cultural transformation. You instill process improvement into the corporate DNA.

2. Business Reengineering’s high priest said core process owners, process maturity, and performance measures are what count.

Reengineering focuses on radical changes in core, end-to-end processes. In addition to laying out an approach for making one-time improvements, Reengineering’s high priest (the late Michael Hammer) had advice for organizations wanting to sustain improvement. He implored their leaders to create and track end-to-end process performance and establish an organization — including process owners and councils — to support the processes. He also advised them to continually assess their processes against a model of process maturity — PEMM for short — which he unveiled in an HBR article.

3. Lean “senseis” (teachers) say strategy deployment, executives as coaches, and front-line problem-solving sustain improvement.

Followers of Lean, which is based on the Toyota manufacturing approach that made it the leader in automobile quality (the Toyota Production System), believe top executives need to break down strategic objectives into implications for process improvements to get everyone moving in the same direction. For example, to improve customer satisfaction, an insurance company decided to focus on reducing the number of service requests over 30 days old from 40% to below 5%, which translated into activities in 30 departments. All organizational levels must identify and solve problems, but senior managers must tell front-line workers why efficiency is critical at all times, and then help them remove waste and improve service to customers.

4. BPM missionaries say processes and process knowledge embedded in software, an enterprise architecture, and a central process management organization sustain improvement.

Most missionaries of the BPM religion come from a heritage in information technology. They believe companies can sustain process improvements if their people use a company-wide software system (such as an ERP application), which has standard processes embedded in the software. They also advise companies to use business process management software to map and document process flows and how work should be executed and to monitor performance. They also believe in building a BPM “Book of Knowledge” (a codification of process improvement “best practices”) and a BPM “Center of Excellence” (a central organization where process experts reside and develop guidelines and procedures for documenting and analyzing business processes).

A few companies that lead in sustained process improvement have drawn from the best of each religion to embed continuous improvement in their organization.

Shell Oil’s downstream (refining and retail) businesses have rolled out a global implementation of enterprise software SAP with standard global processes (as the missionaries of BPM would preach). The company has trained its people to be Shell Sigma Belts (following the precepts of Six Sigma), and appointed process owners and established an elaborate process governance structure (as Hammer would have recommended). What’s more, the company helped develop Hammer’s PEMM concept and is now training Lean managers.

Chemical company Air Products has adopted nearly every approach for sustaining improvement from all four religions. Sloan Valve appointed core process owners several years ago following the Reengineering playbook. The manufacturer has since introduced quality techniques (“kaizen” events), as well as Lean strategy deployment methods and tools.

There is no reason that organizations wishing to sustain process improvement should not draw on all these ideas, becoming “Unitarian Universalists” and bringing together the best of each religion.

Request: What approaches have you seen companies adopt that have kept their attention on process improvement? Have any of these companies combined the approaches of different process religions?

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Brad Power is a consultant and researcher in process innovation. His current research is on sustaining attention to process management — making improvement and adaptation a habit (even fun?). He is currently conducting research with the Lean Enterprise Institute.

 

Q #232: What is an “elegant solution”?

Matthew May

I first encountered the term when reading Matthew May’s The Elegant Solution: Toyota’s Formula for Mastering Innovation in which he observes, “Elegance isn’t about being hoity-toity. It’s not about lofty concepts and grand designs. It’s not about beauty or grace, or anything to do with aesthetics – ugly is okay. Elegance is about something much more profound. It’s about finding the `aha’ solution to a problem with the greatest parsimony of effort and expense. Creativity plays a part. Simplicity plays a part. Intelligence plays a part. Add in subtlety, economy, and quality, and you get elegance…Elegant solutions relieve creative tension by solving the problem in finito as it’s been defined, in a way that avoids creating other problems that then need to be solved. Elegant solutions render only new possibilities to chase and exploit. Finally, elegant solutions aren’t obvious, except, of course, in retrospect.”

After Karl Krayer’s brilliant discussion of In Pursuit of Elegance: Why the Best Ideas Have Something Missing at a recent meeting of First Friday Book Synopsis, I re-read May’s sequel with an expanded and enriched perspective (Thank you, Karl) and came upon this passage: Donald Knuth’s definition of elegance is “Symmetrical, pleasingly memorable, spare – with the ease and immortal ring of an E = mc2.” Shortly thereafter, May observes, “Symmetry. Seduction. Subtraction. Sustainability. These are the key elements of elegance – the laws that can help us harness the power of the missing piece.”

Throughout his lively narrative, May cites numerous examples of “elegant solutions,” almost all of which seem obvious but only after they are formulated. The Toyota Production System offers an excellent case in point. “As is natural and intuitive, I had been looking at what to do, rather than what to not do. But as soon as I shifted my perspective, the vaunted Toyota Production System became for me a study of what wasn’t there, and of how and what to stop doing.” The word “Kaizen” means “change for the better” and the laws of subtraction guide Kaizen.

Obviously, the challenge is to know what to leave out, subtract, eliminate, etc. Antoine de Saint-Exupéry speaks to that when suggesting that “perfection is achieved not when there is nothing more to add, but when there is nothing more left to take away.”

Comments, questions, requests, or suggestions? Please share them. They will be most welcome and I thank you for them. Best regards, Bob