A Publication of WTVP

What is the proper organizational model for an organization’s continuous improvement effort?

As I discovered several years ago when researching my thesis, there is no “silver bullet.” I tell people that there is no one model that works for everyone; it varies from organization to organization. Anyone who has been working with continuous improvement or lean transformation for any length of time will tell you that the effort will not work without the visible support and personal involvement of the senior management at a particular site, but the same holds true of the personal participation of the organization’s senior executives. That does not mean, however, that the effort has to be top-down driven to be successful.

Toyota Motor Corporation

Many might agree that the most advanced company with regard to continuous improvement and lean transformation is Toyota Motor Corp. Their senior management is involved in, and supportive of, the continuous improvement process, but it’s certainly not a top-down driven effort at Toyota. It was that way when I first benchmarked their company 25 years ago, and it’s still true today!

It’s the way they do business—it’s in their corporate DNA. The Toyota Production System (TPS) is the way the company operates, but their continuous improvement efforts are bottom-up driven, with all the different work teams throughout every function of the company leading their own projects. That’s really the holy grail of continuous improvement: separate work teams identify waste in their own work area processes and initiate their own process improvement activities without specific direction from management. However, there are very few organizations that have even come within the same time zone as the holy grail, let alone attained that level of continuous improvement.

Go Forth, “Champion!”

What I see in most continuous improvement programs is that they are treated like the latest management fad, and the people in the organization look at it as just another “program of the month” being pushed on employees by management. If lucky, the organization may appoint someone as the “champion.” The “champion” is given the responsibility (usually without the organizational authority, senior management involvement or support needed for success) to “go forth” to implement the new program.

Organizations fail to give the proper support and resources to a program that can provide significant results but also drive employee engagement and accountability. It is not the process the organization uses to conduct its business. In fact, the continuous improvement effort is often at odds with the existing, established processes and metrics the organization uses to run the business, so it is destined to limp along and fail.

The “champion” is tasked with getting people trained (usually focused on the factory floor, where only a small portion of total improvement can be achieved) and to conduct some kaizen events to get the organization “lean.” The employees (or associates, if you like that term better) are not really involved in the continuous improvement effort and are just doing what the command-and-control management structure is telling them to do.

Embracing from the Top

Typically, the rank and file have no voice in the projects being undertaken and are only taught what they need to know about the problem solving and continuous improvement necessary for the project they are assigned to. This is a recipe for failure and the primary reason that less than five percent (in most practitioners’ opinions) of continuous improvement efforts produce sustainable, positive results. This is how most of the top-down initiatives are conducted, in my experience, and it’s mostly a waste of the organization’s time and resources.

What is needed as an implementation model is the active, visible involvement and support of the person at the top and the senior executive leadership of the organization. Employees must see that it’s not just another “program of the month” but an active commitment by the organization to change the processes. The people who are performing the value-added work for customers must be really involved in the whole continuous improvement process and actively engaged in the evaluation and selection of the projects. Where the existing business systems conflict with the needs of the lean transformation effort and the systems and metrics needed for continuous improvement efforts, the legacy systems are changed or discarded to accommodate the needs of the transformation (improvement) effort.

It sounds simple, but it’s a lot more challenging. Convincing the senior leadership of most organizations to embrace this approach is very difficult since the positive results are often several quarters in the making and could, initially, have a negative impact on conventional financial reporting systems. Enlightened management accounting systems will show the reduction in working capital, substantial improvement in cash flow, improved quality and on-time delivery, improved productivity and the creation of additional capacity with little capital investment. At the same time, the balance sheet and P&L used for external reporting may suffer some short-term negative impact. However, most of the initial expense can be categorized as prevention cost, which the experts have demonstrated a 3:1 to 5:1 return on investment.

Producing a Positive Environment

Continuous improvement is more about rigor and discipline than it is about technique. With that said, however, we need to heed the words of Dr. W. Edwards Deming. Organizations need to train everyone to work on the transformation toward a different culture. People need to understand the tools of continuous improvement and use those tools to identify and eliminate non-value added waste. Everyone can contribute to the continuous improvement effort. They also need to have input into the projects being worked on. Then, senior management has to be visibly and actively involved in supporting the teams in their improvement efforts.

Continuous improvement is a journey, not a destination. Properly supported and rewarded, continuous improvement will produce a positive environment to make it a way of life…everyone will win!iBi