Continuous improvement only demands you take one step at a time toward excellence.
What do Lockheed Martin, Nestle, and the Mayo Clinic have in common? Apart from being massive players in their respective fields, they all rely on the continuous improvement model for maintaining excellence in their organization. They’ve used it to innovate, cut costs, and remain competitive.
You can gain these same benefits. We’ll show you what the continuous improvement model is, how it benefits businesses, the tools it relies on, and how you can implement it in your organization. Let's dive in.
What is Continuous Improvement?
Continuous improvement is an organizational practice that promotes waste reduction, quality increases, and ever-greater efficiency and effectiveness throughout your business processes. By its nature, it requires consistent application. But continuous improvement isn’t necessarily an American invention. It originated in Japan and was known as Kaizen.
What Is Kaizen?
The word Kaizen can be broken into two parts: “Kai” (change) and “zen” (good), or “change for the better.” The meaning of Kaizen is small incremental improvements over time.
The precursor to the concept of Kaizen was Training Within Industry (TWI), an American program developed by the U.S. government that helped rebuild Japan's infrastructure in the early ‘50s. TWI emphasized small steps over radical changes, a lesson learned by the U.S. military during World War II when they discovered they didn’t have the time nor the resources for sweeping innovations in the production of equipment.
Toyota was one of the early adopters of TWI and combined it with Lean to create the “Toyota Production System” and the concept of Kaizen. Then in 1986, a man named Masaaki Imai created the Kaizen Institute Consulting Group and wrote the book that popularized Kaizen in the west, Kaizen: The Key to Japan's Competitive Success.
Since Kaizen is an ongoing practice, there are certain principles you should follow to be able to execute this strategy effectively
The 10 Principles of Kaizen
- Give up your assumptions.
- Proactively solve problems.
- Don’t follow the status quo.
- Reject perfectionism and do the best you can.
- Identify solutions when discovering problems.
- Foster a culture that empowers everyone to contribute.
- Ask the 5 W’s + 1 H (who, what, where, when, why + how) to find the root cause of an issue.
- Gather knowledge and skills from other people.
- Look for tiny, low-cost improvements continuously rather than buying solutions for major obstacles.
- Never stop improving because improvement has no limits.
8 Benefits of Continuous Improvement
One great idea after another (properly implemented) leads to major gains in your business.
Now that you know what continuous improvement is and where it comes from, let’s look at why so many companies have adopted (and benefited from) this organizational practice.
Creates a Foundation for Long-Term Change
Change isn’t easy. It’s especially difficult from the top down. And for good reason, managers and executives are interested in big and fast changes. Continuous improvement is the exact opposite.
But that’s why it’s so effective.
- It doesn’t require major capital.
- It doesn’t demand sudden policy and workflow changes.
- And you can start using it immediately.
Then slowly over time your policies and workflows will naturally evolve and improve.
Actively Engages Employees
Continuous improvement makes use of everyone’s collective knowledge and experience, from the janitor to the CEO and everyone in between. It champions any tweaks or changes that move the needle forward in terms of efficiency, quality, waste, and cost reduction. And it doesn’t matter who comes up with a winning idea. If George in HR comes up with a new solution to onboarding employees, it can be tested and if proven effective, implemented company-wide.
When employees know their ideas will be taken seriously, they’re more engaged in their work and more likely to seek out a permanent fix to an issue (knowing they’ll be rewarded) rather than temporary patches - a pattern too many employees and managers can fall into.
Reduces Turnover and Boosts Productivity
While continuous improvement increases employee engagement, employee engagement reduces turnover. In fact, according to a meta-analysis of 1.4 million employees, following employee engagement was a 25% reduction in turnover in high-turnover businesses and a 65% reduction in turnover in low-turnover businesses. But that’s not all.
Continuous improvement not only affects what is seen - a new process, method, or strategy - but also what is unseen - employee engagement, productivity, and loyalty to their employer.
The same meta-analysis as above found a 21% increase in productivity in engaged employees and a 22% boost in profitability.
A process of continuous improvement eliminates stages that bring no value and optimizes low-value processes. The time it takes to execute a certain task is decreased as a result of the increased efficiency. Employees may be able to do more things in the same period of time as a result. As a result, employees are happy with that contribution to the company and this motivates them. This creates a cycle of positive reinforcement and the productivity keeps improving over time.
Improves Customer Service
Customer service reps are on the front lines of customer demands. They’re in the perfect position to innovate. But many reps don’t feel they have the autonomy to make a difference. They assume (rightfully, in many cases) that change has to come from the top down.
Continuous improvement empowers enterprising customer service reps to become change agents and seek out small fixes to tiny problems along with big solutions to major issues.
Fewer Errors and Blocks
Adopting a continuous improvement strategy has the inherent value of revealing problems and faults in corporate procedures. An employee who makes a focused effort in this area is less likely to make mistakes and uses tools like Six Sigma to cut waste. The immediate result is that you can improve your work performance, provide a more robust customer experience, and save costs as a result of operational inefficiencies.
Cultivates a Culture of Learning and Improving
As employees search for ways to improve the company, they naturally have to learn more about the problem they’re facing and the solution they want to implement. And this process improves them as employees.
A culture of constant improvement and learning helps your organization consistently adapt to the changing marketplace. And as you probably know, adaptation is the key to survival, both in the Amazon and corporate jungle. Continuous improvement allows you to try new things without too much risk and reach beyond your comfort zone without overextending yourself, keeping you lean and flexible.
More Competitive Products and Services
A company's products and services can evolve more quickly with continuous improvement. An organization can use a continuous improvement approach if it wants to actively look for methods to increase the value of its processes. Offering customers and stockholders more technologically advanced products or services is the aim.
Continual vs Continuous Improvement
Some people have a tendency to use continual and continuous improvement interchangeably. While they are similar and pair nicely with each other, they’re uniquely different.
You already know the definition of continuous so let’s define continual and then look at their differences.
What is Continual?
Continual improvement is about making changes that create better outcomes, specifically in regard to quality management.
In fact, the same man who introduced TWI to Japan in the ‘50s, Dr. Edward Deming, also created the Plan-Do-Check-Act (PDCA) methodology (a tool we’ll take a deeper look at later in this post).
What is the Difference Between Continual and Continuous Improvement?
Continually seeks to create better outcomes in your systems specifically, while continuously seeking to make improvements throughout your organization, even if outcomes remain the same. For example, continual improvement would be concerned with reducing the cost of producing a widget from $2 to $1.50.
Continuous improvement, on the other hand, would try to reduce the waste created by production or reduce the time it takes to create a widget, or make producing widgets more comfortable or easier for employees, etc.
Continual has a goal in mind. Continuous improvement’s only goal is greater efficiency and effectiveness wherever it can be found.
3 Continuous Improvement Tools
I think we’ve described continuous improvement enough, now let’s look at the tools you can use to apply it.
The 5S program of Kaizen represents the foundation of continuous improvement. The S’s are simple but extremely powerful when implemented fully.
Here are the 5 S’s from the Kaizen Institute:
- Sort: Sort out & separate that which is needed & not needed in the area.
- Straighten: Arrange items that are needed so that they are ready & easy to use. Clearly identify locations for all items so that anyone can find them & return them once the task is completed.
- Shine: Clean the workplace & equipment on a regular basis in order to maintain standards & identify defects.
- Standardize: Revisit the first three of the 5S on a frequent basis and confirm the condition of the Gemba using standard procedures.
- Sustain: Keep to the rules to maintain the standard & continue to improve every day.
PDSA (the New and Improved PDCA)
We stated earlier that Plan-Do-Check-Act (PDCA) was developed by Dr. Edward Deming around 1950. While it was highly useful and well-received, practitioners of PDCA complained that the “Check” stage was inadequate or lacking.
So, in 1986, Deming updated PDCA and turned it into PDSA, replacing “Check” with “Study.” Rather than just checking on a new process to see if it’s functioning or not, the Study stage emphasizes reflection and investigation to precisely measure improvement for a more accurate understanding of what you’ve accomplished.
PDSA is also commonly known as the Deming Cycle. Here are each of the steps involved:
- Plan - In this step, you decide on what action you want to take to improve your processes, including what will be done, who will need to do it, a timeline, and a communication plan. This step should be the one you spend the most time on out of the entire Deming Cycle.
- Do - After laying out your plan for improvement, execute it. But, be sure to continually observe and measure the results of your actions to prepare for the next step.
- Study - This is the most critical step in the entire cycle. Analyze the results of your experiment and compare them to your plan of how things should’ve turned out. Identify any negative (or positive) side effects.
- Adjust (Act) - If the results of your experiment were successful, you can adjust your current processes and create a new baseline for future processes, new documentation for the new process, and all the new tools and behaviors that come with it. But if your results were unsuccessful, then you can adjust your plan and repeat this process until you find a true improvement for your system.
Define-Measure-Analyze-Improve-Control (DMAIC) is a similarly structured continuous improvement cycle that makes extensive use of data to optimize business processes and designs.
Here’s what you do for each step:
- Define - Identify the problem you’re solving, the scope of the project, the outcome you expect, and the team members you’ll need.
- Measure - Ask yourself “what does success look like?” so you have a working definition you can use to evaluate performance metrics.
- Analyze - Your objective here is to use root-cause analysis tools like the Fishbone Diagram (which we detailed further in our post on quality assurance vs quality control) or the 5 W’s + 1 H that we mentioned earlier in order to identify the gaps between the current performance and your desired performance of the new initiative.
- Improve - After you identify the gaps you’re prepared to develop creative improvements to fix the problems permanently. Weekly meetings are usually preferred here to prevent improvement projects from stalling or going stale. This step will also make use of extensive data collected up to this point.
- Control - If your initiative is successful, then full implementation begins with this step. Standardize processes, document procedures, create checklists, conduct audits, and formally adopt the improvements you’ve made.
How to Implement Continuous Improvement
Continuous improvement can dramatically change your business for the better. But continuous improvement shouldn’t stand on its own. It’s one (brilliant) concept that should be combined with a larger, more robust framework.
What system works seamlessly with continuous improvement?
But just like continuous improvement, putting Agile into practice in your business won’t happen overnight. It takes the dedication of your team, organizational leaders, top executives, and on-the-ground employees to make a new framework operate effectively and consistently for you and your clients. And getting everyone on board isn’t easy when you’re doing it alone. That’s where we come in.
ATC specializes in Agile consulting and continuous improvement. We can help you:
- Analyze your organization and its current processes and provide you with a roadmap and recommendations for adopting or improving Agile capabilities and continuous improvement tools.
- Facilitate your organization’s transformation from legacy methods to a mix of Agile practices and principles to redesign processes, reinvent roles, and restructure incentives for optimal adaptability and performance.
- Scale the Agile system throughout your entire organization, codifying the framework and helping you implement and sustain Agile and continuous improvement initiatives across multi-team projects and platforms.
Reach out today to discover how to make Agile and continuous improvement work in your business.