Initiating Continuous Improvement

By Dr. Ben S. Graham, Jr.
Chairman
The Ben Graham Corporation
© Copyright 2010, The Ben Graham Corporation. All rights reserved.

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Some of the strongest of the world class corporations got where they are with continuous improvement. This article provides an outline of the fundamental elements of continuous improvement and how to put such a program in place. Once these elements are clearly understood, an organization can initiate a continuous improvement program in as little time as one week and at the end of that week have; the support and decision making roles of management well understood, one improvement project completed up to implementation and facilitators trained and ready to complete further projects.

Why Continuous Improvement?

Why should we pursue continuous improvement? We do it to be as good as we can be at whatever we do. This is not a one-time activity. However, people are often tempted to abandon the effort as major advances in the state of the art have created a feeling of having arrived. "We’ve gone about as far as we can go." Inexperienced people are apt to buy into to this idea, however, the more experience we have, the more we come to anticipate further improvement. And, eventually it becomes apparent; there is no end to improvement.

Continuous improvement for organizations is like eating and exercising sensibly is for individuals. Most people realize they should do it. Some get in the habit of it and find it becomes easy and makes their lives better. Many try it with fits and starts or simply don't get around to it.

Outstanding companies have committed themselves to this pursuit. Proctor and Gamble began a continuous improvement effort which continued well over half a century, through numerous changes in management as it literally created an improvement culture within the company. Texas Instruments committed to a corporate policy statement which read; “The customer deserves a better product at a lower price each year and we are going to give it to him. They achieved this by training all of their employees in work improvement.

This presentation is for those who want to do continuous improvement in their organizations or are doing it and want to do it better.

The Fundamental Elements of Continuous Improvement

Although each organization’s continuous improvement program differs in the talents which key individuals provide and the emphasis they place on parts of the effort, there are fundamental elements which need to be addressed effectively. They are:

• Management Support
• The Philosophy of Employee Involvement
• Work Processes
• Improvement Teams
• Facilitators
• Software
• Process Chart Library
• Implementation
• Reporting

Management Support

Senior managers need to give a small amount of their time and be willing to allow their employees to also put in time on improvement projects. As a rule this time returns itself to the organization many times over as the organization is able to tap into its first hand experience and find faster and easier ways of doing its work. The time of senior managers should be about two hours at the start of the continuous improvement effort to learn enough about it to clearly understand the role that they will fill and thereafter a few minutes each time a project comes up for study in their area and about an hour at the close of that project for review and approval of recommendations.

This is also predicated on one of the senior managers taking on a role of champion for continuous improvement. This person will put more time into the effort, particularly while getting it underway. The continuous improvement champion will assist the facilitator or facilitators with establishing an inventory of the organizations processes which, in turn, will enable the facilitator/s to build a process chart library, which becomes the principal structure around which continuous improvement operates. This person will also assist the facilitator/s in working with the other managers to select processes for study.

Respect for the Philosophy of Employee Involvement

Organizations with truly effective continuous improvement programs implicitly accept two authority structures. The first is the social authority which is familiar to most people. It has operating people in the lower levels and supervisors and managers in the mid and higher levels. It is generally pyramid in shape and is crucial for keeping the organization functioning effectively. The second, which is less familiar but just as important is the authority of the facts – the authority of reality itself. The people who are in touch with the authority of the facts are the people who do the work and get regular feedback from the reality of that work. Thus, in terms of the authority of reality, an organization’s top authorities are the people who have the best experience with each of the parts of the work, who are generally found in the lower levels of the organization and for this reason are often ignored.

When these two authority structures are in harmony, organizations thrive. When they are out of harmony organizations suffer. Reality rewards when we pay attention to it and punishes when we ignore it and there is nothing personal about it. Those organizations that make use of the continuous feedback they get from reality through their operating people can improve continuously, which is what Alan Mogensen, the father of work simplification, taught, and I quote, "The person doing the work knows more about it than any other person and is therefore the one person best fitted to improve it." This leads to another basic element of continuous improvement, the use of improvement teams made up of operating people but first it makes sense to deal briefly with the work processes that the teams will study.

Work Processes

Work processes play a key role in work improvement. While improvements in individual tasks can certainly be beneficial, far greater gains are generated when studies are directed at groups of tasks that combine to accomplish a process. However, the study of processes presents a problem in that no one knows the detail of the whole thing. People in different work areas know their parts of a process thoroughly but not the details that precede and follow theirs. Then, if we kick the study upstairs to someone whose responsibilities cover the entire process we lose the detailed understanding. The answer is to bring together a team of operating people, each of whom knows the detail of their own area and who collectively understands the entire process in detail.

Improvement Teams

These teams should be made up of the people from the different work areas of the process who have the best available experience, the people whom the others turn to when they have difficult questions about the work. These are the people with the strongest experience with respect to this specific work; however, this presents another problem because these people are generally the hardest to spare. If we can get these people together to study the process several times for just an hour we can get excellent improvement. If instead we get people who were easier to spare, it won’t matter how long we have them, their efforts will not match the quality of the improvements that we would get from the ‘masters’. For this reason we plan our meetings well, at times as convenient as possible for the team members and we stick to our schedule. The bottom line is that we need three or four hours of the time of a most experienced operator from each area of the process, if we are to get the kind of results that will keep our program going. Therefore, effective management support calls for making these people available.

The teams are organized with a team leader who is the official head of the team and who leads the meetings. It is critical that this person be one of the operating people and not the facilitator, who will be described shortly. The reason for this is that the ownership of the project must be with the operating people. When references are made to the work of the team, they are a group of operating people led by one of their own. There should also be a recorder with responsibilities to record the ideas that the team comes up with and any assignments that are made to be accomplished between meetings. It is not a problem for the facilitator to do much of this work.

Facilitators

A good facilitator keeps projects moving quickly and effectively. This involves: establishing and maintaining a list of processes, assisting management with selecting processes for study and team members to do the studies, preparing charts to organize the facts of each study, coaching teams during their improvement sessions, recharting the processes to reflect the team’s ideas, reconciling the starting charts with the final improved charts (as-is with to-be) to prepare lists of recommendations for approval, coaching each team with their approval presentation, assisting them with preparing their activity list for implementation of approved recommendations, summarizing and reporting the project results and updating the final chart of the process in the process chart library with a chart that shows the process as it has been revised.

Obviously, there is a lot involved in performing as an effective facilitator. It should also be obvious that people who are able to do these things well can make a huge difference in the effectiveness and efficiency of their organization’s work processes.

At the start of a continuous improvement program one good facilitator may get the program rolling with something like a half time effort. However, as the program develops this is apt to grow quickly to full time and is obviously justified by productivity gains that much exceed the cost of the facilitator’s time. As the program continues to grow the addition of more facilitators is likewise justified.

Software

There are two software applications that facilitators work with, one that is crucial to guiding the team through the improvement study and the other, which arranges the processes of the organization so that the facilitator/s and management can manage their continuous improvement. The first is charting (process mapping) software. To use this effectively, the facilitator must know how to gather the facts of a process and how to organize them in chart form. The second software is library software for maintaining the current processes of the organization and the record of prior versions of its processes.

Process Chart Library

The process chart library is the heart of continuous improvement. As each process study is completed, its final installed chart is placed in the library. Gradually the organization accumulates a complete library of how its work is done. A regular schedule is established for reviewing these processes. As each process comes up for review, a copy of its chart is printed out and a team of operating people is formed to study it. A study may be quick and easy if the process chart still reflects the way the process is being done and there are no problems. In some cases the chart needs to be updated for minor changes that have occurred since the last time the process was reviewed. Sometimes the team has problems with the way the process is being done and this can result in initiating an improvement study. Where this study is minor, the team may be empowered to go ahead and do it. Where it is major, involving significant expenditures, relocation of personnel or offices, development of totally new computer programs or changes which will impact organizational policies, the study will generally need to be approved by management.

Implementation

Implementation of approved recommendations is once again led by a person from operations, since it is crucial that the changes and the process itself be owned by operations. Often this person will be the same person who led the study team for the same reasons (i.e. this person knows the work, is respected and will be there after the implementation is completed should questions arise.)

The facilitator can also help considerably with getting the implementation underway by assisting the improvement team in preparing the activity list for implementation, which is generated by reconciling the ‘as-is’ chart with the ‘to-be’ chart. Once these activities are known they are assigned, generally to team members whose work involves the activities. The facilitator may assist the implementation leader to keep track the progress on these activities by organizing them in a Gantt chart or a network chart. Once the implementation is well underway (its completion is in sight) the facilitator prepares a summary of costs and benefits for the project and files a copy of the process chart, as installed, in the process chart library. The facilitator then leaves this project in the capable hands of the team and the team leader, and moves on to other projects.

Reporting

At the close of each project the recommendations that have been installed are priced out in terms of benefits and cost. These saving are accumulated and periodically reported as the value of the continuous improvement effort of the organization’s employees. It is not surprising to see numbers in the hundreds of thousands for these efforts. In fact, Proctor and Gamble once reported over nine hundred million dollars in first year savings for one year.

Summary

When continuous improvement is underway with process teams of well experienced employees regularly reviewing and updating their work processes, it can truly be said that the organization’s processes approach being as good as their people. When this happens, the organization approaches world class performance.