Making Process Improvements Stick
Early excitement usually leads to backsliding.
SFrederick Taylor and W. Edwards Deming, managers have long been obsessed with ways to improve business processes. And in the past 20 years, a host of improvement initiatives, including lean production, Six Sigma, and agile, have swept through a range of industries. Studies show that companies embracing such techniques may enjoy significant improvements in efficiency and costs. But when the University of North Carolina’s Brad Staats and the University of Oxford’s
Matthias Holweg and David Upton looked at the benefits, they noticed a gap. “These things always work well initially, but often the gains fade very quickly,” Holweg says. “It’s always felt like researchers were telling only half the story. It’s not just about putting the programmes in place – it’s also about making them stick.”
To understand why some improvements are sustained and others aren’t, the researchers examined 204 lean projects launched from 2012 to 2017 at a European bank with more than 2,000 branches in 14 countries and serving more than 16 million customers. The lean initiative, started by the head office, was supported by a global consulting firm, which helped create an in-house academy to train lean “champions” at each regional subsidiary. Initial projects focussed on processes (such as opening an account and making a wire transfer) that could benefit from decreased handoffs and fewer steps and were common to all regions. The regional offices subsequently identified additional projects according to their needs. The projects shared an overarching goal: to increase labour productivity, a key variable in service operations.
At first glance, the initiative appeared to be a great success. Over the first four years the bank launched 33 to 51 projects every six months, each involving 1,600 employees, on average. Initial improvements in efficiency averaged 10 per cent; the gains rose to 20 per cent after a year and 31 per cent after two years. Those numbers are in line with the best-performing lean implementations in any industry, the researchers say, and the bank was rightly very pleased.
But when the researchers looked more closely, they found a more complicated picture. Despite the impressive aggregate gains, 21 per cent of projects failed to yield any improvements. And among the 79 per cent that showed initial improvements, many regressed: Only 73 per cent were still producing results above baseline after a year, and after two years the number fell to 44 per cent. Adding up the projects that had no improvements and the ones for which improvements were temporary, only slightly more than one-third of projects held on to gains after two years.
The researchers also explored whether projects that were initially successful could not only preserve the gains but also show continuous improvement – getting progressively better over time, which is the goal of many lean projects. Just 51 per cent of them were continuing to improve a year after launch; after two years the figure dropped to 36 per cent.
Seeking to understand these findings, the researchers looked at factors identified in previous research as influencing the initial success of lean projects: the experience of local leaders driving implementation, the level of training provided, and teams’ familiarity in working together. None explained the difference, suggesting that what accounts for initial success is different from what’s needed to hold on to gains or to improve further.
Interviews with lean champions in the bank’s 14 countries provided some insight. Managers said that one condition needed to keep improving was visible support from board members and senior leadership – without it, frontline workers believe that the company’s enthusiasm for the effort has waned, and backsliding ensues. They also cited the need for consistent measurement and monitoring and noted that problems arise when significant early improvements give way to diminishing returns. “Addressing the low-hanging fruit is easy; it becomes harder in the long term,” one lean champion told the researchers.
The data reinforces these observations. Projects with strong support from the head office showed 35 per cent greater improvement after a year than ones without that support; they were also less likely to backslide, with 79 per cent performing above baseline after a year, compared with 61 per cent of projects not driven by the head office. “Senior leadership, through paying attention to the lean improvements, clearly has a major enabling role in sustaining improvements,” the researchers write. Some companies hope that a continuous-improvement
A TROUBLESOME OBSTACLE TO SUSTAINED IMPROVEMENT IS INITIATIVE FATIGUE, WHICH OCCURS WHEN LEADERS JUMP TOO QUICKLY FROM ONE IMPROVEMENT FAD TO ANOTHER
mentality will become embedded in their culture and will motivate frontline workers even without the involvement of senior leaders, but this work suggests that hope may be unrealistic.
The researchers also interviewed executives with deep experience leading lean initiatives across a range of industries; from this, they identified three ways in which organisations can help initiatives achieve sustained improvements.
The first is by communicating the programme in a clear narrative that aligns with the organisation’s purpose. For example, a hotel might focus on how a lean process will improve guest satisfaction; that’s more likely to motivate employees than an emphasis on cost savings. The second is by directing efforts towards pain points whose easing would clearly benefit employees. For instance, one hospital’s initiative aimed to decrease the time medical personnel spent on paperwork, freeing them up for patient care. The third is by ensuring that senior leaders act as coaches, enabling small wins to increase employees’ motivation and engagement.
A particularly troublesome obstacle to sustained improvement, the researchers say, is initiative fatigue, which occurs when leaders jump too quickly from one improvement fad to another. (One of the researchers has joked about the danger of airport bookstores, which tempt travelling executives to pick up business books that may send them in pursuit of a new improvement plan.) Embarking on a new project is often more exciting than staying the course, but that doesn’t necessarily deliver the best long-term results. Staats says, “It’s always easier to start something, whether it’s weight loss, going to the gym, or smoking cessation. Getting individual changes to stick is hard, and getting organisational changes to stick is even harder.”