Changes that Make Continuous Improvement Difficult

Change in Leadership Direction:

Businesses, at times need to change direction and continuous improvement initiatives in those times may take a back seat. This is commonly seen when a company is going through a crisis. A very common example is falling market share associated with decrease in revenue and net income. This gets exacerbated during recessionary periods and usually necessitates significant workforce reduction, and in such scenarios the continuous improvement program usually takes the hit as it is not considered mission critical to running the business in those times. Of course the root cause of the company going through this phase needs to be explored in the first place. A Lean organization usually does not have to go through massive layoff phases if they are doing their job right.

Sometimes leadership changes, and they bring in their own preferred methodology just because they have been exposed to it previously. This usually works but can become a pitfall if it is applied without really following a strategic approach to selecting the methodology. As mentioned earlier, 3M and Home Depot are great examples of this. In addition, leadership needs to understand that structured continuous improvement initiatives never give immediate results, and there is an upfront cost. In the Hoshin Handbook Pete Babich mentions that it takes at least three years for the Hoshin process to work properly. However, many leaders who are initially enthusiastic, subsequently lose patience once they feel the methodology is taking too long and either pull the plug or let it die a slow death by not visibly supporting it.

Change in Business Situation:

Likewise, when a company gets taken over the continuous improvement program gets affected. Many times during those transition phases the focus shifts from long term strategic continuous improvement to getting short term gains. Usually that leads to a shift from Six Sigma to Lean.

Lack of Reporting/Business Analytics Capability:

Setup a strong reporting capability that will enable you to link the Lean or Six Sigma results to the bottom-line. Even though cost saving is not the entire reason for implementation of Lean Six Sigma, it is extremely important to be able to link the improvements to the bottom-line or to the long-term strategic goals. If the strategic alignment was properly carried out, then this step will be easier to apply. At the end of the day, most of the Lean Six Sigma improvements should correlate to the bottom-line and/or how it helps the organization to reach its strategic plans and objectives. Also, this will help to ensure that the finance team is on board with the planned improvements and their expected benefits. The finance team should be part of the planning phase of the Lean Six Sigma implementation so that the estimated savings/benefits are calculated well before the implementation.

 

Photo: Jack Moreh

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