Mak­ing Process Im­prove­ments Stick

Early ex­cite­ment usu­ally leads to back­slid­ing.

Business Today - - HARVARD BUSINESS REVIEW - Il­lus­tra­tions by Ajay Thakuri

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.”

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