Continuous Improvement (CI), in itself, is a great policy for any forward thinking business to adopt, not just in selected areas, but business wide. I know of some businesses that just focus on direct processes or product services that they offer “because it’s our core business”. Nothing wrong with that in isolation, but what about the rest of the business, what types of CI are being applied, if any, and how are you going about it??
So, if you were responsible for a business entity, wouldn’t it be great if you had all the employees looking at the timeline from the moment a customer gives you an order to the point when you collect the cash and have them all working towards reducing the time each process takes by removing or minimizing the non-value added content?
My experience is that some companies have been very good at doing this, it certainly energizes a business when ‘shackles’ are released for idea generation, not that it should become a free for all!! The key is doing it in a controlled way, getting people involved and improving their work spaces, enabling improved productivities, reduced unit costs and improving product/process quality.
What you find is you get a huge list of ideas, some very achievable, some off the wall, some that are cosmetic yet have a positive effect on the work place and some that are breakthrough. The difficulty becomes execution without demoralizing employees when their ideas aren’t executed. Management can be run ragged if these changes aren’t co-ordinated, especially if there no dedicated resources to support the process.
Another way of looking at CI is to look at it on a process by process basis, or value stream by value stream. Just think about how many business processes, both direct and indirect, there are, even within an average size company……… there are plenty!!
Classically, direct business processes can have an effect on the unit or service costs/quality, whereas all the indirect business processes have an effect on the business overheads. For the accountants who might be reading this, I know they are in some way interrelated!
But by looking at the value stream, you begin to see the inter-departmental relationships within the business, as well as the touch points with suppliers and customers and develop the opportunity of realizing a greater cumulative improvement. It’s also way easier to manage this type of CI, easier to control and to deliver benefits.
For me this basically covers two levels at which CI should be conducted, one very much pulling in employees and engaging their experience and using this to gain an improvement. The other one, very much based on current day and process focused. Both of these ensure you improve on what you have today.
There is a ‘third type’ of CI which is used in conjunction with a tool from Japan called Hoshin Kanri. This is a form of CI built on planning and actioning CI for business performance into the future using the ‘X Matrix’. It’s not something that you would have seen in the Matrix series of movies, but there is a quote from Councilor Harman along the lines of “I think about all those people plugged into the Matrix”. Personally I would like to see a lot more companies using this kind of business tool as it provides elements of focus connecting the long and short term business activities. Get plugged in!!
What this tool does, is it makes the leadership team look forward in a three to five year window, to where they see the business needs to be. To kick this off, a business needs a few selective statements/objective or indicators such as ROCE, GP product to market, increased market penetration and potential acquisitions of competitors as examples, each preferably being measurable in an unambiguous way.
Once you have started to think about where you want to be in three to five years time and have that, you then need to think about, and align, your annual objectives so that they support and contribute to your longer term plan. The X Matrix then uses a very simple alignment technique that clearly shows which annual objectives will be contributing to the three to five year breakthrough objectives.
The next step is to think about what activities and projects need to be planned, or are in a project hopper already to enable the annual objectives to be achieved. As well as what daily KPI’s will be impacted, and who is tasked to complete them.
Once this is done, you then have a linkage from current planned projects and activities that connect through annual projects directly to where the executive team wants to move the business in the three to five year time frame. This whole approach is further supported by what is known as a series bowling chart and a series of key local indicators to confirm on track/off track, as well action plans.
There are quite a number of companies in RSA using the first two form of CI, but very few using CI as a component of achieving their longer term strategic objectives.
Businesses should be making time to look at CI constructively, and not just for the sake of it. Better still; companies should be deploying CI as a component of strategic planning right through to extracting ideas from employees, and not just relying on one or the other.
Contributed by Stan Shaw, Senior Client Partner at Breakthrough Management Group
