Strategic Continuous Improvement

The idea of “continuous improvement” is a strange animal. On one hand, making things better – more effective, more efficient, easier to do – is universally a good idea. On the other hand, making improvements takes time, investment and focus, and causes disruption. As a senior business leader – if “continuous improvement” ideas get out of hand, these can create significant waste and actually destroy value.

I remember sitting in a strategic review and planning session with a continuous improvement team. We started unpacking how production had performed, what was important to improve performance and what the critical focus areas were. As the thinking started to elevate to broader business value and strategic priorities – one particular continuous improvement specialist’s face started dropping. As the conversation continued, their expression eventually evolved into a look of shock. I stopped the discussion and checked in. They solemnly opened up that they now realised that the program they had been driving for the previous 6 months, while helpful in many aspects, was actually not driving value. That their time, attention and energy could have been spent on more value-adding challenges. And, furthermore, that their program had actually taken managements’ time, attention and focus away from working on value-adding initiatives.    

One of the hardest concepts to get teams to understand is that:

There is a difference between useful change and valuable change.

Many ideas are useful. Few are valuable.

Working on a myriad of ideas can be useful. It can also distract and disrupt. It’s better to DELIVER a shortlist of focused change initiatives that are value maximising.  

The key to this is the centralising management of continuous improvement

This doesn’t necessarily mean setting up dedicated teams and managers. It simply means centrally screening, prioritising, aligning and driving significant change in the business.  

Frontline staff do not have a strategic view of the business. By definition, they have narrow terms of reference. However, they know what holds operations back. They are fully aware of the challenges, frustrations and inefficiencies of the job. They are also often incentivised to look for opportunities to improve.

Managers, too, have their focus areas, their ideas and their agendas.

When you start putting all of this “big idea” energy together – without the reinforcement of a focused business and operational strategy – a lot of potential can be wasted.

So, how does one proactively and strategically manage continuous improvement?

Here are 5 steps.

1.      Embed and cascade business strategy using OKRs

2.      Establish a strategic prioritisation framework

3.      Fill your funnel(s)

4.      Create a roadmap

5.      Deploy and maintain focus

Lets unpack:

1.      Embed and cascade business strategy using OKRs

Make sure you have a tightly weaved strategic narrative that contextualises your next 12 - 24 month planning horizon. Take this a step further to define Objectives and Key Results (OKRs) for the next 12 months. These are cascaded across divisions and departments and down the line – so each team has a specific and measurable shortlist of what they need to achieve.  

2.      Establish a strategic prioritisation framework

In order to trade off and prioritise initiatives we need two things: good 80/20 strategic business cases, and these need to include the key elements used to prioritise initiatives. When it comes to continuous improvement, it’s not a simple ROI calculation. You need to consider dollar value, risk, top line versus bottom line impacts, cultural impact, etc.

The RICE framework is an example of a scoring framework that includes Reach, Impact, Confidence and Effort.

There is the two-by-two Impact versus Ease of Implementation.

My first piece of advice would be to consider different models and your business and decide on your own.  

My second would be not to try to make it too scientific and mechanical. When assessing significant initiatives, there are many complex factors at play. Fleshing out the prioritisation criteria, and then having robust and cross functional prioritisation discussions, will yield the best strategic results.  

3.      Fill your funnel

Now, there are two ways to “fill your funnel” of initiatives.

a.      Have a central portal where Managers can submit improvement ideas.

Why Managers? Because you want an initial sense check before your funnel gets flooded with random “rats and mice” ideas. There are a bunch of simple things (“clean the carpets”) that managers can drive on their own. For opportunities worth submitting after initial review, the Manager can submit this and attribute the Team Member for recognition.

b.     Run Business Improvement Diagnostics

These are structured reviews of business processes to identify improvement opportunities and the impact the improvement will have on the system. These are most effectively done by Business Analysts or specialise consultants and include brown paper exercises, deep structured interviews, activity value add and DILO (Day In the Life Of) analyses, etc. These are high investment, but thorough, exercises so it is always worth targeting them to areas of strategic priority.

4.      Create a roadmap

Leveraging good business cases and the prioritisation framework, the relevant operational steering committee should assess the funnel of ideas, prioritise short, medium and long term focus areas and populate a working continuous improvement roadmap. This is a master Gantt chart of all of the significant, strategic initiatives, projects and programs. This is done while considering both resource allocation (for the doing) and line capacity for change / disruption to ensure good line-led change and impact is achieved.

This holistic roadmap is used to both track progress but also as a basis for regular reprioritisation as new initiatives are identified, progress is tracked, and learnings are gained.

5.      Deploy and maintain focus    

The last link in the chain is deploying the right support capacity and capabilities to assist the line and drive efficient change. It is imperative that focus and an 80/20 mindset is maintained to bank value as quickly as possible and not let project scope and complexity take on a life of its own. This is where focusing the business and steerco on a shortlist of high value projects comes into its own. It is so much more effective to drive a small number of high value projects and keep an eye on their alignment and scope – than it is to manage the chasing of 100’s of “good ideas”.

It is easy for good intentions to run away with themselves. Maintaining a tight handle on the change energy and capacity in your business or division is mission critical to get the most out of your management and change resources and really move the needle!