You may have heard talk about continuous improvement, there may be a push to implement the principles in your business, or you may be interested in the results that embedding continuous improvement in strategy could bring. Whatever it may be, this article will demystify what exactly ‘continuous improvement’ means, and how you can embed it in your overarching business strategy.
The first thing to understand is what continuous improvement isn’t. Continuous improvement is not focused on radical changes. We’re not ripping the book apart and starting afresh, rather, adding pages, through a process of recurring incremental changes. It may seem like a slower way to improve things, but incremental changes ensure continuous improvement is as it states - ‘continuous’.
Making improvements incrementally in your business - ‘evolution’ - has several benefits over radical innovation or ‘revolution’.
Firstly, incremental changes avoid the risks that are associated with trying radical new ideas, which displace existing processes, often at cost to the organisation with uncertain results. Continuous improvement projects are typically prioritised using a ‘highest value, lowest cost first’ model. This method maximises returns while minimising risks, which encourages by-in from the wider organisation and increases the chance of realising a positive R.O.I from the get go.
Secondly, over time, recurring incremental changes will benefit from a ‘compounding effect’. You can think of this similarly to how compound interest works; if you continue making improvements of 1%, that percentage point will be worth a lot more in a few years than it would be when you started. In fact, when comparing 100 improvements of 1% with 1 improvement of 100%, the prior gives a cumulative yield of 270%. This is all due to the compounding effect.
There are various types of continuous improvement, each with different advantages and disadvantages, and each being appropriate for different situations. In reality, most organisations' continuous improvement strategy will employ various concepts from each. To start you on your journey, we’ve summarised 5 of the key concepts: Kaizen, Six Sigma, Lean, Deming Cycle and 5’s.
The Deming Cycle, or the Plan-Do-Act-Check (PDCA) cycle was popularised by Edwards Deming. It can be thought of as a practical plan for how to implement continuous improvement in a business setting. The process is cyclical and recurring, with iterations of the Deming cycle occurring multiple times throughout an improvement project, until the problem is solved. Though the Deming cycle was an early invention in the field, it is used throughout many of the more modern methodologies used today.
Kaizen is a Japanese business philosophy which pushes continuous improvement in all elements of business. To achieve this, it encourages all employees to take part, meaning suggestions can come from anywhere in the business. The philosophy utilises the Deming Cycle or ‘Plan-Do-Act-Check’, and with a focus on waste reduction, has seen the rise of efficiency focused practices such as Just-In-Time production, popularised by companies such as Toyota.
Six Sigma is a more modern evolution on continuous improvement strategies. Six Sigma can be thought of as an ‘upscaled’ strategy, typically deployed within large organisations concerned with manufacturing. The methodology uses a variety of tools and techniques, including designated roles and responsibilities, with the end goal of maximising quality control by reducing the statistical failure rate for each process to fractions of a percentage.
Lean manufacturing is often used in conjunction with Six Sigma, and since its inception has extended far beyond manufacturing, to industries such as software development. The core principles however remain the same, paying great attention to the reduction of waste wherever possible.
5s is a methodology of continuous improvement that states 5 pillars: Sort, Set in order, Shine, Standardize and Sustain of how to organise an effective and continually improving work environment. Though for this methodology, the concept is much simpler than those mentioned previously, the benefits can be far reaching, quick wins, that have been successfully implemented across a range of industries
Turning theory into reality, it is now time to think about how you can implement these principles into the overall business strategy.
Before jumping straight in, it is important to first consider the aspects of what makes a successful implementation of continuous improvement. Once these are identified, you can draft a plan-of-action that will guide you on your journey, maximising your chances of success.
The first thing to consider is how to convince surrounding stakeholders of the benefits of continuous improvement. Since many of the improvement options will require cooperation from departments or employees who may not be familiar with the concepts, they first must be convinced and committed to making a positive change in the organisation.
Next, we suggest prioritising available improvements using the lowest cost and highest benefit matrix mentioned earlier. By applying this method, positive results are likely to be realized sooner, proving the value and return-on-investment, and further encouraging by-in from the rest of the organisation.
Third, it’s important to continually monitor the inputs, progress, outputs and success rates of any improvement project. This will ensure projects stay on track, and will communicate the benefits that are realised to key individuals. If you haven’t already, we would suggest looking into a digital product to help track and measure the results of your projects.
As a final note, we think it’s important to be made aware that like anything in life, continuous improvement comes with uncertainties. Not all projects will be an immediate success, but this is fine and to be expected. Do all you can to keep the momentum going, and before you know it, results will be realised.