In our first blog post we introduced the vicious cycle which leads to the failure of most improvement initiatives in organizations. This is driven primarily by stakeholders’ low expectations: most initiatives do not receive the full support and resources they need, which again dooms them to failure from the very beginning.
How can we break this cycle? In his article „Continuous Improvement and Auditing“1, Dr. Barnard offers up the six criteria2 every change needs to fulfil according to Dr. Eli Goldratt in order to avoid the well-known negative effects and to persuade everyone:
Every change must deliver excellent results
Variability is a fact of life and means that insignificant results (e.g. 5% improvement) are not measurable. This is why you set an ambitious target which can be clearly measured, as well as the consequences on all stakeholders if the target Is not achieved.
Every change must be based on Win-Win-Win for all stakeholders
As soon as just one party involved feels they are losing out in a change, it will be very difficult to ensure their agreement and thus their cooperation: the initiative is already doomed to fail. Ensure that all stakeholders understand that only Win-Win solutions will be accepted from here on out.
Every change must be low risk compared to the likely benefits
Most managers are much more skilled at measuring the risks of an action than the risks of non-action. Inevitably, this leads to inertia. Therefore, a good improvement initiative begins by highlighting its risks. Differentiate between high impact / low risks and low impact / high risks. Determine which of these apply to the change (and to the non-change).
Every change must be simpler than before
Complexity should be avoided: it is often hard to understand (it will be harder to investigate all possible risks and side effects), harder to implement and is likely to take much longer to yield the desired results. Therefore, every change is measured by whether it makes the current situation simpler or more complex.
Every change must be defined as actionable information with fast feedback
Only concrete, actionable steps have a chance of being implemented. This means they have to be measurable, so they can quickly provide feedback on whether the action is leading to the desired result or needs to be adjusted. Each stakeholder should be able to explain how he implements each next step and how he can insure it is working.
Every change must be checked so that if it really works, it will not self-destruct
Almost every change carries within it the potential for self-destruction, for example, if sales far exceed expectations and production cannot keep up with demand. Therefore, stakeholders are encouraged to identify and present such possible “negative” consequences (with the cause-and-effect chain leading up to them), allowing for counter-measures to be planned.
With these six criteria fulfilled, you will have the best conditions for a far higher success rate of your change initiative. But how can you determine where exactly change is most necessary?
Focus is the answer
As we have seen before, a willingness to change alone is not enough to guarantee success, and mistakes are easy to make. Well-known methods such as Six Sigma or TPS tend to lead to three types of mistakes, as Dr. Barnard explains:3
- Selecting an area for change with very visible local problems or improvement potential, but which have little or no impact on overall business performance.
- Selecting issues that are simple or easy to solve.
- Selecting problems that match our toolkit, rather than those that actually need solving.
What’s missing, then, is the necessary focus to concentrate on what needs to be done. This is one of the basic building blocks of the Theory of Constraints and has been previously discussed in this blog. An organization’s throughput is determined by its constraint. Only here can a change have a breakthrough effect on the entire system – an improvement in any other area of the business will have little or no impact on system performance as long as the constraint continues to limit the system. This focus on the constraint allows you to use the tools of existing improvement methods to their full effect.
In our next blog post we will be discussing some more typical mistakes and how they can be avoided.
1: 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
2: Goldratt, E. M. 2008. “The Goldratt Webcast Program on Project Management: Sessions 1–5. (5 part video series)” Roelofarendsveen, The Netherlands: Goldratt Marketing Group, 2008 presented in 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. 432
3: 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.441