Question: What do a successful person and a successful business have in common?
Answer: They both value the importance of continual improvement. No successful person is ever content simply staying the way they are. The average person reads around 4-5 books a year, but the average CEO reads around 4-5 books per month! Bill Gates reportedly reads upwards of 50 books a year. Why? Because he is obsessed with learning and improving.
The success of a person is proportional to their desire to learn, improve, and (most importantly) implement those lessons into their own life.
The mindset of continual improvement that makes individuals successful also works to make businesses successful. Once a business is off the ground and successful, the owners cannot become complacent with keeping the business the way it is assuming it will stay successful.
Smart business owners and managers are always looking for ways to improve their business.
As the business world is always changing, continuous improvement, more often than not, takes the form of process evolution and adoption of new practices. Would Coca-Cola be around today if it stuck with the same practices it had when it was started? Of course not. It evolved, adopted new practices, tried new processes, created new products, found new ways to distribute its product, etc.
The successful business is willing to make the hard decisions and adopt the necessary improvements to stay relevant and ensure the quality of their product. As your industry evolves, you evolve with it. The business that thinks their product is “good enough” and doesn’t seek out continuous improvement processes (CIP) surrenders to its competitors and eventually dies of stagnation.
We have created a 7 step process for CIP implementation. Use these steps as a stepping stone to help your company become a champion of CIPs.
Step 1: Creating a Culture
How can your business implement CIPs and avoid the fate of the stagnant company? The list of ways is endless. However, it is helpful to develop a framework that your business can refer to when implementing new processes.
It begins at the core of your company. From the CEO to the assembly line worker, continuous improvement is a mindset. It is either embedded in the company itself as a founding principle or it permeates the company over time. In any case, continuous improvement is not a one-time occurrence, it is a constant, ever present way in which a business is run and how the employees of the business function.
Creating a culture of continuous improvement often involves many changes in your business. Among other things, there will be a drastic overhaul of company policies in exchange for new ones, letting go of toxic employees and hiring forward thinking replacements, and introducing new processes for idea generation and implementation. For changes to take place for the continual improvement of the company, an environment conducive to change must be created.
Step 2: Developing a Framework
There are three leading frameworks for creating continuous improvement within an industry.
The Japanese word for improvement is Kaizen. Kaizen doubles as the CI tenant that everything is in a constant process of change and has room for improvement. Acknowledging that changes need to take place is the first step to making those changes. Company leaders must be comfortable in acknowledging that no system within their company is perfect and that improvements can always be made.
Six Sigma (6s) is a popular collection of certifications and set of techniques for continuous improvement used by many companies worldwide. The techniques focus on a data driven approach to eliminating defects within an organization through analysis and continued changing of processes.
A leading technique within six sigma is the acronym DMAIC – Define, Measure, Analyze, Improve, Control. These techniques are applicable to every individual part of your business.
The main ideology of the Lean methodology is to conduct experiments on how your company can evolve through customer-focused changes. Benchmarking is pivotal to Lean changes. Lean follows the PDCA or Shewhart Deming Cycle – Plan, Do, Check, Act.
Lean and Six Sigma combine to create Lean Six Sigma – a methodology of its own which combines the techniques of both frameworks and works concurrently with each.
Every company is different and as such will adopt its own framework for continuous improvement. A company’s CI framework can be developed from within the company itself and be specific to the needs of that company. The important thing is that a model is defined and executed.
Step 3: Define Potential Areas for Improvement
Once your company adopts a mindset of continual improvement, the next step is to identify areas of your company that are ripe for improvements. Begin by breaking your company down into the individual internal components. Here are some examples of areas that often need improvement:
- Products and Services
- Employee Engagement and Productivity
- Technological Systems
- Administrative and Technical Processes
Next, list under each component what aspects should be improved. Can’t find anything? Analyze data, take surveys, ask the employees involved in those areas. Opportunities for improvement will be everywhere. Many areas may be up-to-date and well-tuned, but it is true of every company: every area can be improved.
Step 4: Decide the type of Continuous Improvement
Now that we have our list of areas to improve, we move on to what type of improvement the areas require. There a three major types of changes.
Solving an Existing Problem
This improvement is the most common in every industry. Identifying an already existing problem and formulating a solution to solve the problem (e.g. fixing a software bug).
Improving upon a Good Product
The second most common improvement. Identifying opportunities to increase the relevance or add a new feature to a proven product to create buzz around the product and provide an added value to the customer (e.g. a new flavor of Dr. Pepper).
Implementing an Entirely New Idea
The least common improvement, but by far the most important in terms of business growth, is developing an entirely new product from scratch. New products and ideas take significant amounts of time and resources to create. Sometimes these products are revolutionary and sometimes they fail but without creating new products and keeping up with the market, businesses fail (e.g. the original Apple iPhone).
Step 5: Defining the Time-frame
In order to appropriately implement the CIP, a time-frame must be established. Breaking changes up into milestones creates a template by which you can prioritize changes and make them more manageable. Regarding time-frame, improvements can be broken into two categories.
Incremental changes occur all the time. Often, departments such as I.T. are addressing these issues every day. Making a touchup there or a tweak here. These changes require very little time and often very little thought. Sometimes they are obvious but sometimes they are beneath the surface waiting to be found. In practice, these changes are constantly being made behind the scenes. Problem solving and product improvements fit into this category
Breakthrough changes require more time, more consideration, and more resources. They often require meetings, a budget, and a dedicated team. These are the changes that a company publicizes and often shape the company into something more than it was before. You can think of an incremental change as a weekly software update on your phone and a breakthrough change as an entirely new phone. All three types of improvements fit into this category.
From these two time-frames, decide what improvements can be done quickly and what improvements need more time.
Step 6: Make the Improvements
We’ve created a framework, defined the improvements needing to be made, and created a time-frame, now it is time to implement the changes. Delegate the project to the team of people best suited for the task. People with the knowledge and skills necessary to see the project through to completion. This can be from within the company or outsourced to a third party.
The key to implementation is momentum. Creating momentum for the completion of improvements requires increased focus for those involved in making the changes within the company. For complex issues that require unique solutions, it is vital that the importance of each step is prioritized correctly and approached systematically. An unorganized team will more than likely make problems worse, not better. Appoint a Project Manager to oversee all of the actions and keep the deliveries on schedule
It is vital that an organization takes on breakthrough improvements, sparingly. Decreasing the number of large projects being worked on at one time within an organization guarantees that a larger percentage of the projects will be completed.
If your team is being pulled in multiple directions, it automatically decreases the value they will add to the individual projects they are working on. An overwhelmed worker is an unproductive worker, unproductive workers cannot complete tasks assigned to them, and incomplete tasks decrease morale company-wide. Choose your battles wisely and your company will succeed.
Additionally, remind yourself that larger problems within your company don’t arise overnight (though some do). Most problems become big problems because they have been neglected for too long. A major part of creating a CI culture at your company is the willingness to address the small issues before they become something bigger.
Creating lasting changes in your company requires time and dedication. Short-term solutions cannot produce long-term results, and long-term solutions take time to create. Pace yourself and be patient, results will come.
Step 7: Measuring the Impact
The final step to implementing CIP into your business is measuring the impact, or ROI. This can be done multiple ways across multiple channels.
It is estimated that only 1 in 10 improvements has a direct, positive financial impact right after implementation; however, if the company sees the impact over time it is a worthwhile change. Putting systems in place to track the financial ROI of a change in the company will help in later decisions regarding the change and will make a measurable bottom line impact.
An average of 1 in 4 improvements show an immediate return in time saved. The time saved through improvements can sometimes be very difficult to measure, but often becomes apparent within the first weeks of implementation. Are your employees accomplishing more in their workday through new systems they are using? Are payments taking shorter periods of time to be verified or paperwork less time to be processed? These changes are very concrete and can be measured against previous data.
Employees are the backbone of a company and the responses you receive from your employees are vital for measuring improvements. Are you retaining employee engagement and loyalty through your changes? Conduct company-wide surveys and host meetings with the employees most effected by the changes. Employees work harder for a company that values their opinion.
How have the changes in you company impacted your customers? Are they pleased or not? Are they returning as a result of the changes or not? Reviews, surveys, and focus groups are guaranteed to deliver truthful responses from your customers. Often, companies release a beta version of their product to receive feedback while the product is in development. Hearing from your customers is the best way to improve a product.
As with all good things, CI comes with its set of challenges. As stated above, not every company is in a mindset to implement CIPs into their business model. There may be a lack of communication and no unity of purpose between departments. Issues that should be of paramount importance may not be on your radar. These are all things that must be addressed in Step 1: Creating a Culture.
It is also important to acknowledge the difference between changes and improvements. Not all changes are improvements; that is where Step 7: Measuring Impact becomes vital. Not every change will yield the results it was initially thought to yield. Success is not a guarantee, but with practice, the ratio of successes to failures will tip in your favor.
Resources are another factor that becomes a roadblock in CI. No business has infinite resources, even the successful ones. The difference is that successful businesses know where to use their resources and where to save their resources.
Practice smart resource allocation and make the changes your business needs when the resources are available. Additionally, when securing funding for a new project, be absolutely sure of the ROI.
In The End
The purpose of a CI approach to business is to create stronger business practices, better products and services, and, overall, a better business. A successful business model needs to acknowledge the need for, and embrace the practice of continual improvement. In implementing CI business-wide your business will become accustomed to healthy change and will grow as a result.
Experience in continual improvement is key; the more you practice searching out and improving aspects of your company the more attuned you become to finding those issues and making the changes. Don’t be a company that mimics best practices, be the company that defines the best practices.