CONTINUOUS IMPROVEMENT ( CI)

CONTINUOUS IMPROVEMENT ( CI): Cost of Quality: Is it antithetical for Continuous Improvement?

2010-09-19T07:11:00.000-07:00

CONTINUOUS IMPROVEMENT ( CI): Cost of Quality: Is it antithetical for Continuous Improvement?

Cost of Quality: Is it antithetical for Continuous Improvement?

2010-09-19T07:01:00.000-07:00

Greg Bounds, Lyle Yorks, Mel Adams & Gipsie Ranney in their book Beyond Total Quality Management has argued that Cost of Quality implicitly constrains continuous improvement.
The theory:
In-reference to Economics of Quality of Conformance, the argument here is that cost of unavoidable cost ( preventive cost) goes up, the avoidable cost comes ( defects) comes down.Total cost will come down naturally until a point where both cost meets and then the prevention cost goes up bringing the total cost up again. Hence organizations need to manage both cost to ensure, the total cost stays low.

The argument:
Cost of quality was developed purely based on meeting product specification. But quality dimension has moved beyond conformance to specification.

I tend to agree with the argument that Cost of Quality might not be suitable in the present situation. Quality need to be seen from a wider perspective rather the specification based.

I seek your comments on the above arguments.

Shrinking CEO Tenure: What effect on the CI Culture?

2010-09-16T09:19:00.000-07:00

Last week I was asked the following question:-
How to sustain a CI culture when there is a change in CEO?
He had a new CEO, who joined the organization few months ago. The previous CEO left to a better paying job.
Well, it is an interesting question. Because the trend worldwide, shows that the tenure of CEO's have been on a decreasing trend It used to be 9.5 years in 1996. In 2007 the tenure has dropped to 6 years.

http://www.forbes.com/2008/03/07/executive-ceo-tenure-lead-manage-cx_mk_0307turnover.html

http://www.boozallen.com/news/658883

Will the tenure continue to drop? My guess, is a big yes.

With this trend, definitely, sustaining a CI culture will be a challenge.

I think, the key question, that the new leader need to ask, is if the current culture supports the vision and values of the company. The new leader need to have a clear understanding of the vision and values. Usually, values and visions are non-negotiable and need to be preserved.

Jim Collins, in his book Built To Last, has clearly established, that successful companies have strong values which they preserve, while they stimulate progress through pro-active actions.Built to Last: Successful Habits of Visionary Companies.

Some successful companies has continuous improvement as their core values. Or Service to customers as a core value. Companies which want to move forward, must continue to improve all aspect of the organization without loosing sight of it's values.If its is clearly stated that CI is a value the company beliefs upon, then the impact on the CI culture will be minimal.

The key point to remember is actions that supports the core values may go through changes, depending on the needs of the customers and markets.

For example: Nordstrom's " Service to the customer above all else" is it's core ideology:- but overstocked inventory policy can be changed at any time.

If there is a need to tweak the culture, then it must be done, as long as, it is aligned to the vision and values of the organization.

For the new leader to be successful, he need to be engaged in regular communication of the company vision and values and link his actions that is in-line with the values.

So my answer to the question is if the company has CI or Customer satisfaction as a core value, then there should be any impact on the CI culture. If the leader, decides to over-ride the established values, then, his tenure in the organization might be shorter then 6 years.

NOTE: For those who have not read the book by Jim Collins, I will highly recommend his books Built to Last Built to Last: Successful Habits of Visionary Companies and Good To Great..Good to Great: Why Some Companies Make the Leap... and Others Don't

Both a excellent management books based on facts and figures.

The Traits of A Committed Leader to CI ( towards a Organizational Excellance)

2010-09-12T23:04:00.000-07:00

In order to develop an organizational culture that strives on excellence, Leadership commitment forms a vital part of the transformation. What constitutes a leadership commitment apart from usual stuff of allocating resources and attending training:-

1. Lead by Example
   The leader need to believe in the company strategy, vision and actions. His own actions need to reflect on the agreed strategies.A leader who emphasizes on Safety but do not wear Seat Belt or speaking on the phone while driving will send a wrong message to the people.

2. Seek Alignment
   A committed leader will spend time to ensure the organization leadership is aligned to the company strategy and visions. Leaders down the line need to have the buy-in. Where few leaders are not aligned, the senior leader should not hesitate to make the changes by bringing in new leaders who will subscribe to the strategy.

3. Regular Communication
   A committed leader will engage in regular formal and informal communication to align the organization to the CI Strategy. This will seek to expand the involvement to the rest of the organization. They must be a formal communication by the senior leader on the progress of CI Strategy.

4. KPI's that supports CI Strategy
   A number of KPI's that is linked to the CI Strategy shall be established. This will drive the organization toward achieving the KPI.

5. Establish Follow Up
   A committed leader will ensure a follow up system is in place to track the progress of CI Strategy. This can be in the form of monthly meeting of senior leaders.

6. Regular Visits to Shop Floors
   A leader need to allocate time to visit the shop floors to get a 1st hand information on the implementation of CI strategies and also to seek informal feedback from the team-members of the CI progress and improvement ideas.

FIVE TRAITS OF CI FOCUSED CULTURE

2010-09-10T23:06:00.000-07:00

An organization need to create a CI focussed culture within the organization before they can embark on a sustainable CI effort. What it means to have a CI culture?

1. A Committed Leadership
   An important factor in the CI Journey. Jim Collins in his Good to Great book, term this leaders as Level 5 Executives.Leaders who channel their ego away from themselves and into the larger goal of building a great company. This leaders are focused on building a sustainable organization which will deliver results year on year. The leader uses CI as strategic weapon. CI Focused leader will ensure to install a system that tracks the progress of CI and will be the main spokesperson on the values of CI. A committed leader will ake sure he visits and observe the production floor on a regular basis.

2. Do Away With Program of The Month Mentality
   CI should be seen in the context of program mentality.CI should be formed as a way of doing business for the company.The focus should not be on programs that deliver short term financial results but no sustainability achieved. CI should be weaved into the fabric of the organization.

3. Customer Satisfaction as a Core Value
   Delivering value and satisfaction to customers shall be a core belief of the organization. The organization should be mobilized to ensure high customer satisfaction is achieved in order to sustain the future organization. CI should be used to ensure the achievement of customer value and satisfaction. Establishing a core value founded on the improvement of customer satisfaction will lead to the alignment of the organization to one common goal.

4. Continuous Improvement of Systems and Processes
   Systems and Processes must be continuously improved to ensure high customer satisfaction. Again the organization is mobilized to improve systems and processes to improve the core values and belief of the organization.

5. Become Learning Organizations
   Errors and mistakes should be seen as opportunity for learning. Learning organizations do not apportion blame on anyone, rather learns from mistake and ensure it is communicated throughout the organization as part of learning.The seniors need to consistently be engaged in training and coaching the subordinates.Teams will share success stories across the organization.

THE 7 PREREQUISITES FOR SUCCESSFUL CONTINUOUS IMPROVEMENT

2010-09-04T02:25:00.000-07:00

An organization that embarks on a Continuous Improvement (CI) program need to have the following prerequisites before in order to have a sustaining success to the survival of the company.

1. CI Culture embedded into the organization

The 1st and foremost important factor that an organization must have in driving a sustaining improvement. In a simple term this means the way things are done in the organization. The thoughts and practices of people throughout the organization must be changed to adopt the continuous improvement culture.

2 An understanding on concept of culture

Senior Managers need to have an understanding the concept of culture. This will allow the managers to understand the behavior in the organization and also assist on how to make the changes in the organization to embrace the CI culture

3. Streamline the organizational hierarchy

The organization should be geared toward a common strategy or principle. The departments should not work in silos taking care of their own interest, rather work towards achieving common goal. Culture of continuous improvement will support the streamline the organization into a common team.

4. Strong Executive Sponsorship

Good CI initiatives will most likely lead to changes in systems and processes. In order for the changes to take place, senior management support and commitment will be required. The support can be in terms of allocation of resources or moral support to implementation teams.Another indication of strong executive sponsorship is by ensuring CI forms a part of Management Cycle. This will ensure CI initiatives are discussed as part of organization strategy. A passionate leadership on CI is required to ensure a sustainable improvement

5. A defined CI Road-map

A road-map that states in detail the CI journey will be a good start to ensure the success of the CI efforts. A road map, most likely will be developed at top level thus indicating formal commitment of the management team. Teams will have better clarity on what is being done and what will be done in the longer term. A major failure of CI efforts is that it is not continuous. This issue can be addressed by having a a clear road-map.

6. Strategic Mapping of Projects

CI initial efforts should be targeted at low hanging fruits and also target at those that can be easily implemented. One of the easiest tool that be bring immediate result is 5S housekeeping projects. Target the 5S projects at most disorganized areas for improvement. Success in this area will bring support from everyone in the organization.

7. Education on CI for Senior Managers

Senior Managers must have a clear understanding on the concept and context of CI. They must be able to differentiate between breakthrough improvement and incremental improvement which forms the CI efforts. The senior managers must also have some knowledge on tools and techniques that be used in CI efforts. Most importantly, flexibility in usage of tools must be emphasized. This includes a clear understanding on PDCA, 5S, Kaizen, Six Sigman, Lean and etc.

Credit to: Deepak Rustagi, Sheena Sivaprasad, Michael Webb, Keith Russel, Athul Pasalkar, Chetan Lahoti, Mark Philips, Errette Dunn, Brett Creedon, Matt Ralph, Steve Hennel & Brian Lawrence

Members Linkedin : Continuous Improvement, Six Sigma and Lean Group

Continuous Improvement: Know Your Culture or Else You Will Fail

2010-08-26T22:17:00.000-07:00

If you are embarking on a continuous improvement effort, be it Lean, Six Sigma, Kaizen Toyota Production System, Balanced Score Card or others that is available in the market, I suggest, you hold your horses and read this first

How many times have you read or heard from your business associates who have tried and failed miserably in their continuous improvement efforts. And they start blaming the tools they used. And they move on to the next continuous improvement effort by using another tool. I will not be surprised if they fail on this too.

Why did they fail? Is it the problem with the tools? Wait a minute........We also have heard about a number of successful companies...... GE is well known for it's Six Sigma effort. So, the tolls might not be as bad as how it has been made to look.

So where is the problem?

One of the major reason why, companies fail in their improvement efforts is that they never bothered to incorporate the effort as a component of the management cycle apart for the usual components such as Annual Strategic plan, Human Resource Plan, Purchasing Plan and Etc.As such, the improvement efforts are treated as another program of the month an delegated to the Line Managers to implement the actions.

This can indicate the lack of commitment from the senior management team. For senior managers, they will not agree with this argument on lack of commitment. For them, their commitment stems from the fact that they have agreed to hire a consultant to assist the company in implementation and also they took part in the launching of the continuous improvement effort. But this is not the real indicator of commitment. Commitment means, allocating and spending the time to review the progress of the efforts and also going to the ground more frequently to access first hand on how the effort is developing and listening to feedback on how further improvement can be made. This simple steps will send a strong message that the company is serious about the continuous improvement efforts.

So the 1st lesson in introducing the continuous improvement effort is for the management to give real commitment to the effort. And they need to have a clear understanding what it means to give clear commitment.