TO CONTINUOUS IMPROVEMENT
leaders around the world have been FOR MORE THAN 20 YEARS, fascinated by the Toyota Production System. The system — known as ‘lean’ — has made the automaker one of the most successful and admired companies in the world, and as a result, the benefits of applying lean manufacturing principles to any kind of organization are now well known greater profitability, higher quality, lower costs, and improved employee engagement — to name a few.
Unfortunately, while many have tried, few organizations have actually achieved a lean transformation. The reasons for this are varied: some leaders can’t make the intellectual leap required to translate a system from auto manufacturing to, say, healthcare or banking; and in other cases, the Japanese jargon — heijunka, kanban, muda — is too high a hurdle to overcome, and lean is never seen as anything but an alien way of working. I would argue that trying to be like Toyota is their key mistake: what leaders need to do instead is learn — from Toyota — how to convert their flabby organizations into ‘fit’ ones.
I define a fit organization as ‘a dynamic, constantly-improving, profoundly customer-focused entity that delivers superior performance and results over the long haul’. As evidenced by Toyota, becoming this kind of organization rests upon six principles: 1. Making an unshakeable commitment 2. to increase value by 3. Doing the right work (things that deliver value to
the customer) 4. In the right way (through standard work) 5. With continuous monitoring 6. And structured coaching for everyone (using a scientific
These principles are the subject of the six chapters of my latest book [ Building the Fit Organization], in which I distill critical principles from Toyota’s ‘lean playbook’. The core of lean is founded on the concept of continuous improvement in both products and processes and the elimination of non-value added activities. In this article I will share some of my thinking about this universal principle of organizational fitness.
The Improvement Imperative
In a 2014 New Yorker article, James Surowiecki made the case that the biggest change in performance over the past few decades isn’t that the best performers in various fields are so much better than they used to be — although they are; but rather, that so many people in these fields are so extraordinarily good.
For example, in the 1970s, only two chess players had ‘Elo ratings’ (a measure of skill level) higher than 2700. These days, there are typically more than 30 such players. Likewise, the quality of classical musicians has improved dramatically — to the point that piano virtuosos are now, as Times music critic Anthony Tommasini has observed, “a dime a dozen.”
The story is the same for professional athletes. Innate athletic ability is now the bare minimum requirement for sucess; what really matters is a relentless commitment to practice and improvement. Gone are the days when professional baseball and football players sold insurance or laid bricks in the off-season; today’s pro athletes spend that time honing their physical condition — and any athlete that isn’t willing to commit to fitness and improvement isn’t going to compete at that level for very long.
The business world has seen the same shift. In the decades after World War II, American manufacturers dominated, unchal- lenged by foreign competition. However, with dominance came complacency, in the form of low productivity and poor quality. One 1969 study found that 30 per cent of the people who bought a new American car that year judged it to be in unsatisfactory condition; in 1974, service calls for American televisions were five times as common as for Japanese televisions; and in 1979, it took American companies more than three times longer than Japanese firms to manufacture their TVS.
With the arrival of foreign competition — primarily from Japan — the imperative to improve became unavoidable. But for some companies and industries, it was too late: the U.S. television industry, which had more than 90 manufacturers in the 1950s, ceased to exist in any meaningful way when Zenith was sold to Korea’s LG Electronics in 1995.
By contrast, the U.S. auto industry has survived — but only by dramatically improving product quality. As in sports and music, however, the gap between the best and the worst in
the industry has shrunk: in 1998, J.D. Power and Associates found that the most reliable car had 92 problems per 100 vehicles, while the least reliable had 517 — a gap of 425. By 2012, the gap had closed to 284 problems. As J.D. Power’s Dave Sargent has said, “We don’t have total clunkers like we used to.”
And it’s not just cars: despite increasing complexity in nearly every category you can think of — from cell phones to planes to computers — quality and reliability has continually increased. The overall lesson is clear: improve, or face extinction.
Making Improvement a Daily Habit
Don’t try to find a spot on the Stairmaster at your local gym on January 8th. The busiest week of the year at any gym is the second week of the new year, when — fueled by an excess of calories from the holiday season — people make resolutions to get fit. Of course, by February, everything is back to normal, and you could toss a football in the gym without hitting anyone.
Organizations aren’t that different. Preceding each new fiscal year, senior management announces its goal to capture the top spot in the marketplace, rolls out 37 new strategic initiatives, and vows to elevate employee engagement. By the second quarter, it’s business as usual: people get caught up in trying to make the quarterly numbers and employees feel no more connection to the company’s vision than they did before. The organization loses momentum, fails to achieve its stated goals, and waddles along until the next annual strategic off-site, when the cycle repeats itself.
For both individuals and organizations, the root problem is the same: there may be a stated goal — ‘lose 15 pounds’ or ‘be #1’ — but there is often no clearly-defined program to reach that goal. If there is, it is often the latest fad, promising results with minimal effort. More importantly, for people who abandon their fitness efforts, going to the gym and exercising is something that remains external to the daily flow of their lives:
it is viewed as a chore that requires additional time and effort — not as something that is as fundamental to their life as, say, going to work or brushing their teeth.
Truly fit individuals don’t so much make a generic commitment to getting fit as they weave exercise — and health — into the fabric of their daily lives. Similarly, truly fit organizations don’t so much make a commitment to an improvement program per se as they build improvement into the way they operate, every single day.
Creating the Culture
Organizations don’t naturally turn towards continuous improvement. It takes focused, concerted effort to create this kind of behaviour and culture. Following are nine points to consider.
1. STATE YOUR COMMITMENT TO CONTINUOUS IMPROVEMENT — AND EX
Most organizations face a ‘flavour of the month’ probPLAIN WHY. lem with new initiatives, because often, the underlying rationale isn’t articulated. HR initiatives, in particular, tend to receive this sort of cynicism, and you can understand why: most people don’t see how self-identifying as a Myers-briggs ENTJ is going to affect new product development — or their bonus at the end of the year. Fit leaders live the gospel of continuous improvement and continually show how it directly affects the organization by connecting it to larger goals and strategy.
Nothing is more toxic to the estab2. PARTICIPATE, DON’T PROCLAIM. lishment of a continuous improvement culture than hypocrisy. A fit leader participates in improvement activities herself. It doesn’t matter whether she is leading them or involved peripherally — the key is regular participation. People need to see that you value improvement enough to invest your own time in the same activities you’re asking them to commit to.
Or3. CHALLENGE PEOPLE TO IMPROVE. THEN, CHALLENGE THEM AGAIN! ganizational inertia is a formidable opponent. You’re not going to overcome it by asking people to do one project — or two, or even five. People are busy with their daily responsibilities. As a leader, you need to continually challenge them to find improvements. This kind of ongoing pursuit can be emotionally difficult, because people may feel that they can never satisfy you. But challenging people is actually a sign of respect, for their existing skills and their capacity for growth and learning.
Make no mistake about it: com4. GIVE PEOPLE TIME TO IMPROVE. mitting to improvement means regularly devoting time and attention to it. Google and 3M have garnered much press for their ‘20 per cent time’ rule — free time for people to work on new products and projects. I would argue that if creating something new is worth 20 per cent of peoples’ time, surely, improving every facet of the way your company operates is worth at least six per cent (i.e. 30 minutes a day). At Bloomington, Minnesotabased Quality Bike Parts, managers are held accountable for giving employees the time to implement their improvement ideas, which may involve redistributing work, bringing in temp labour and shifting schedules.
A Google 5. MAKE IDEAS VISIBLE AND RESPOND TO THEM — QUICKLY. search for ‘suggestion box’ leads to page after page of boxes with padlocks. I’m not sure where the notion came from that employee suggestions — like dangerous animals — should be kept under lock and key. Instead, post improvement ideas in public, where everyone can see them—and always respond to them within a few days. Quality Bike Parts’ policy is that managers must respond to ideas within 48 hours, and those that are selected must be implemented within three weeks. Fit companies know that if you don’t respond to all ideas, you increase the likelihood that people will see your actions as inauthentic.
6. FOCUS ON INCREASING CUSTOMER VALUE — NOT ON COST SAVINGS. Cutting expenses is not inspiring to anyone, and as a result, asking people to find cost savings is a guaranteed dead end. People are much more energized when they are able to make improvements that create value, provide better service, or make their colleagues’ lives (and their own) a little easier.
If you’re consistently running experi7. EXPECT (SOME) FAILURE. ments, you will inevitably fail, some of the time. Don’t criticize people for not succeeding. The Silicon Valley mantra these days is, ‘fail fast’, which provides license to experiment without fear of failure.
Sometimes it’s hard for 8. LISTEN CAREFULLY FOR COMPLAINTS. people to think about improvements they can make; but by contrast, it’s usually pretty easy for them to find things to complain about. Fortunately, every complaint is a nascent improvement opportunity: seize upon them, and challenge people to solve them.