There is no doubt that in order to remain successful in today’s competitive marketplace, a business must strive for continuous improvement – not just on paper, but in practice as well. These days, managers have access to numerous tools such as Six Sigma, TQM or Lean Production to assist them in their quest for better performance or higher efficiency. And yet, despite decades of development in the field, the majority of improvement initiatives still fail or deliver far less than possible: 50 to 80% do not achieve their set goals.1
Doomed to fail?
We have previously discussed some of the reasons for this high failure rate: change initiatives constantly struggle with resistance and lack of support from employees. In his article “Continuous Improvement and Auditing”, Dr. Alan Barnard explains some of the reasons for this as well as the effects it has on the business’s improvement potential:2
Dr. Alan Barnard, Vicious cycle related to high failure rate of change initiatives3
Change initiatives have little chance of success if they don’t receive the necessary support and resources, which in turn reinforces the impression that they are a waste of effort. A vicious cycle!
As a result, businesses tend to implement only small changes – or worse still, delay them until they become inevitable and the organization is already operating in “crisis mode”. Clearly, a healthy and flourishing business can spare more energy and resources for improvements than one that is fighting for its life.
This is where there a radical paradigm shift needs to occur. Change doesn’t only happen when the current situation becomes untenable; it becomes part of everyday operations: the business is continually invested in its own development. This Process of Ongoing Improvement (or POOGI) is an integral part of the Theory of Constraints and builds upon previously developed principles.
Centuries of Process Improvement
This idea of improving existing processes existed long before the rise of Business MFAs. Science itself is built on the concept that every discovery, every development, should be continually questioned, leading to the next one and so on, ad infinitum. The economic sector too recognized this early on. The idiom “Time is Money”, attributed to Benjamin Franklin, describes exactly this concept: if something can be made faster (or better), it can also be sold faster and better – resulting in higher throughput.
Henry Ford was the first to seriously concern himself with improvement processes in modern organizations, mainly through trial and error. Half a century later, Taiichi Ohno’s Toyota Production System (TPS) and Kaizen brought the idea of Continuous Improvement to the Western business world. Both Ford and Ohno emphasized that every procedure could and should be challenged at any time. Both were also mainly focused on wastage: materials, money, time or resources must be used as economically (and thus efficiently) as possible.
How to get improvement wrong
Of course improvement initiatives themselves can also waste precious resources, e.g. through poor planning, inadequate targeting, or losing momentum long before completion. By improving the “wrong” thing, we have not only wasted resources: at the same time, we have failed to improve the “right” thing with those same resources. The end result may actually be worse than the initial situation, ensuring that future support becomes even less likely: the previously mentioned vicious cycle.
Because the majority of businesses have had bad experiences with improvement initiatives, they tend to revert to one of the following behaviors:
- Avoiding change altogether (this way at least we won’t waste resources, the status quo is maintained).
- Many small, risk-free changes (to maintain stability).
- Very few, large scale (often high-risk) changes (to achieve growth).
Dr. Barnard thus makes a distinction between errors of commission (doing the wrong thing, or doing the right thing incorrectly) and omission (not doing the right thing). Fear of failure generally leads to people preferring to do nothing rather than doing the wrong thing, while ignoring that the consequences of errors of omission can be just as damaging, for instance through missed opportunities or by failing to remove a problem.
Most businesses are very good at hiding long-term issues: procedures are adapted and workarounds established until the problem itself has become completely invisible – no one even stops to consider how much more efficiently the business would function if the problem were simply eliminated.
Let us not forget also that we can only Learn From Experience: if you don’t make mistakes, you cannot know what to do better next time. In order to learn from our mistakes, we do of course need a robust monitoring and feedback process, making this an important part of any healthy system of Continuous Improvement.
We can conclude that change is inevitable, as every organization is under pressure to perform better – now and in future. So what needs to be done? The next five blog entries will explain in detail how to implement Continuous Improvement initiatives, make robust decisions, ensure widespread buy-in and monitor results within your business.
1: This percentage is based on several studies quoted by Dr. Alan Barnard in figure 15-1 p. 409 f. “High Failure Rate for Various Change Initiatives and IT Projects” in the article Dr. Alan Barnard, “Continuous Improvement and Auditing” from the book Cox III, James F., und Schleier Jr., John G. Ed. Theory of Constraints Handbook. New York: The McGraw-Hill Companies Inc., 2010. p. 403-454
2: Dr. Alan Barnard, “Continuous Improvement and Auditing” in Cox III, James F., and Schleier Jr., John G., Ed. Theory of Constraints Handbook. New York: The McGraw-Hill Companies Inc., 2010. p. 403-454
3: Idem, p. 411