Execution is people, culture and making the right evidence-based changes & decisions (ongoing)
Chapter 2 – CI is not capital expenditure
Definitively, Continuous Improvement (CI), Process Improvement (PI) or Focused Improvement (FI) do not use capital expenditure (CapEx) to deliver change imperatives, not a single penny. Admittedly, an output of CI/PI/FI can become an input to Business Improvement or Appropriation/Capital Procurement processes; however, CapEx is released from stress-tested and sensitivity-analyzed business cases, balance sheet agility and is the governed delivery of benefits cases/IRR. CI by direct contrast is the delivery of ‘blood out of a stone’, it is the domain where discrete increases in efficiency, yield and throughput are achieved, physical or administrative. It is the eternal search and re-prioritization of activities towards perfection; precision first and ultimately accuracy. CI is iterative and virtuous. CI is a requisite of corporate DNA and is formally led by qualified and outcome-experienced Six Sigma ‘belts’ and Lean Practitioners. CI is equally at home in the factory, the mine, the hospital and the administrative operation – no workplace is immune to the P&L benefits delivered by CI whether revenue or expenditure benefits.
DESIRABLE ACTIONS in industry-leading CI
Don’t summarily ‘tighten budgets’, rather, specifically have professionals analyze the business and trading conditions, apply zero-based budget (ZBB) techniques, Pareto the improvement path across all budgets (including all the ‘protected’ central budgets) and prioritize and resource the mutually agreed tracts of improvement work. Recognize, reward and promote the change champions; further embedding change and CI into corporate DNA.
Don’t not implement a change methodology led by CI professionals; rather understand, through ZBB, seek Lean, Six Sigma (6s) or a combination of Lean 6s (L6s) as the best fit for the opportunities within revenue and expenditure sides of your business. Ensure that the loss buckets and opportunities are clearly defined and prioritized to return shareholder value.
Don’t disregard, misunderstand or misuse lean or 6s tools; rather, create and champion improvement through exception-management using 5Y’s, fishbones, SMED, TIMWOOD, VOC, Pareto, hypothesis tests, regressions, segmentation, automation and design-integration.
Do not accept ‘cowboy change’; rather embed repeatable and transparent governance and reporting frequency. For clarity, many businesses implementing CI fail on two governance fronts, they ‘rob Peter to pay Paul’, the act of creating gains by creating inefficiencies, waste or cost in other areas. Additionally, many businesses ‘move the goalposts’ of their baselines, specification or perfection, so as reporting appears positive, though change might be inconsequential. Change through CI is challenging; support the CI teams, maintain integrity in governance and demand all in the organization equally deliver CI imperatives.
Do not accept a ‘blame culture’, rather celebrate being an exception-managed business. See failure, waste, error in the process, poor capability, organizational gaps and lack of market share as the purest oxygen from which improvement can breathe. Use evidence-based techniques like formal Root Cause Analysis (RCA). Be an information-led organization, challenge data, analysis, assumptions and ensure the change agenda supports the entire organization knowing their “critical numbers”.
Others might generically suggest using ZBB, celebrating change champions, employing transparent governance and being exception-managed – don’t selfishly interpret, rather be best-in-organization action-oriented.