There’s a silent crisis unfolding in organisations worldwide. Symptoms include a stall in innovation, plummeting efficiency, and subsequent problems for colleagues and customers. Not exactly a clean bill of health!
So, who or what is to blame for this crisis? Perhaps surprisingly, it’s not caused by an external source but originates in-house. It’s an internal issue and entirely self-inflicted. The crisis referred to is the decline of continuous improvement. The lack of attention paid to the continual improvement of processes affects the operational excellence of an organisation. This has huge financial implications for organisations.
For any younger followers unfamiliar with these terms or those of you who haven’t heard them in a long time, here is a brief description;
Continuous Improvement
A business strategy that involves evaluating and revising processes, methods, and practices within an organisation. It aims to make changes to increase business operations’ accuracy, efficiency, and effectiveness.
Operational Excellence
A business management approach that emphasises continuous improvement across all aspects of business and within all business processes. It involves creating a culture where every employee can see, deliver, and improve the flow of value to the customer. It’s also about outperforming the competition by doing things better than your competitors.
The methodologies that have been developed based on this approach include;
- Lean manufacturing: a systematic method designed to minimise waste while keeping productivity constant.
- Six Sigma: a set of methodologies, tools, and techniques used to improve processes, and minimise defects.
They are often successfully combined to make Lean Six Sigma.
Myth Debunked
Contrary to popular belief, it isn’t only suited to the manufacturing industry where it originated. Every type of organisation should focus on it if they wish to thrive. Here are some examples of those who have used it effectively in the past;
- Manufacturing
- Healthcare
- Retail
- Service Industry
- Finance
The Past – Efficiency, Efficiency, Efficiency!
Haven’t times changed! The more ‘mature’ among you will remember the mailrooms of the past. They were the nerve centre of every organisation where all correspondence both external and internal, was handled. With that, came longer turnarounds while waiting for it to reach its intended recipient, which slowed things down. Young people today are shocked and amused at the notion of everything being completely paper-based and not having instant communication.
In the 1990’s service companies went through a phase of implementing Lean Six Sigma, making their processes slicker, moving from paper to telephone and fax, email, and then eventually came the “digital transformation”. Thousands of people were trained internally to look at processes and make them lean, customer-focused, and reduce the cost to serve. Large companies were very successful as a result of making this a priority.
The Present – Discontinuation, Dilution, Decline!
Thirty years later the talent with that mindset and capability have now either moved on or retired. In their place are recruits who have learned the job but haven’t been equipped with a mindset of continuous improvement in a customer-first culture. They don’t have the skill or capability to look at processes and pinpoint problems.
Consigned to Oblivion…
Many companies talk about operational excellence and continuous improvement. But do they walk the walk? It is very often no more than a box-ticking exercise that looks good on paper. In reality, it has often been consigned to oblivion.
The Numbers Don’t Lie!
Systems thinking teaches us that 95% of a company’s opportunity is within the processes and systems their personnel work within, while 5% lies with personnel. However, management focuses most of their time on the latter. It makes no business sense that something with a 95% bearing on outcomes is set aside for a much smaller factor with a 5% bearing.
Why Neglect and Self-Sabotage?
Why do companies partake in this avoidable form of self-sabotage? It isn’t a conscious decision. As the old saying goes, ‘they can’t see the wood for the trees’. They fail to make the connection that their lack of continuous improvement is the source of their pain, and the magnitude of damage inflicted. Processes aren’t given enough attention to spot red flags and gaps. In essence, they don’t give continuous improvement the respect it deserves by linking it with operational excellence.
C-suite Situation!
This isn’t just an issue within teams. We must look at the top, where all the big decisions are made. Some C-suite executives don’t properly understand Lean Six Sigma and what it is about. When process improvement isn’t focused on, it gradually slips from the front of mind, and the natural evolution of a changing workforce dilutes it faster and quicker than you can imagine.
Some C-suite executives understand the need and are vocal in their wishes to re-visit Lean Six Sigma. While others don’t understand the methodology and its benefits enough to agree. With more young business owners than ever today, this is understandable.
Ignore at Your Peril!
Colleagues struggling due to lack of process leads to;
- Sickness
- Low Morale
- Lack of alignment
- Retention Issues
Customers then feel the brunt of this with a poorer experience, leading to;
- Rise in customer complaints
- Customer attrition. They go straight to the competition
This all harms the Organisation with a range of impacts;
- Financial – EBITDA will suffer (earnings before interest, tax, depreciation, and immortalisation).
- Loss of reputation due to poor Net Promoter Score. Detractors are, unfortunately, more vocal than Promoters.
The Future – The Continuous Improvement Renaissance!
There is now an apprenticeship shortage as people aren’t being trained. It’s time for a Continuous Improvement Renaissance! Yes, we live in vastly different times from the nineties, with technological advances, including AI. However, continuous improvement and operational excellence still have their place. Some aspects of teaching it may change slightly, but the principle will remain the same.
Let’s go Retro!
Imagine sending the DeLorean on a little field trip back to 1994 when processes were a priority. But you don’t leave it there. Instead, you bring it back to 2024 with a fresh paint job, new tyres, and some small modifications to bring it into the 21st century. But in essence, it remains the same. A classic car with so much to offer.
Continuous improvement may have fallen out of fashion recently, but the number of companies in pain today due to poor processes suggests it shouldn’t have. It is tried and tested and works wonders, just like the trusty DeLorean. Let’s go retro and take it for a spin! On that note, a brand-new model of the DeLorean is available to buy this year, but we can’t guarantee the time-travelling feature!
Next Steps!
Companies should examine their processes either in-house or seek external help with this. Once they have identified issues, they can formulate a plan of action. Such plans can save companies thousands or even millions of pounds.
Leaders and employees require candour to improve processes and systems. Leaders must convince team members that they won’t be the target of blame, then take swift, decisive action to improve the system and processes based on the team’s recommendations by partnering with them to create a plan, then share in the successes that follow.
Measures of Success
If we achieve our vision, we can expect the following organisational improvements:
- Increased Net Promoter Scores.
- Reduced OPEX (operating expense) costs, call volumes, cost of customer acquisition, and customer churn.
- Increase in the number of ‘Refer a Friend’ customers.
- Increased opportunity for cross-selling.
- Increased employee engagement due to them connecting with a common purpose of delivering an excellent customer experience.
Your Experience – A Call to Action!
How much focus does your company place on operational excellence and continuous improvement? Many companies will agree it’s beneficial, but how many successfully execute the strategy?
Ask yourself the following questions;
- Do you have customer complaints?
- Do you have longer-than-expected calls?
- Do you have high attrition rates?
- Do you have low colleague engagement?
If you have answered yes to any of these questions and choose process over pandemonium, please consider reaching out to us at www.mastersinminds.com where we will be happy to assist and can offer expert help and guidance on where to begin.
