Making Daily Continuous Improvement a Reality

How to make continuous business improvement a way of life for all employees

It is rare in any industry for employees not to be somewhat familiar with continuous improvement buzzwords. Lean, Six Sigma, Kaizen, 5S, and the rest of the continuous improvement word soup can be found deep in the background of the average employee's vocabulary but mainly absent in daily practice. Like a buzzword graveyard employees will tell stories of how we “used to do that”.  Sometimes that story will paint a picture of a better yesteryear and sometimes it will have a darker tone of how a system poorly rolled out damaged the organization resulting in a general view of ill repute. 

Clearing Up Some Myths About Continuous Improvement

1. “Continuous Improvement is not right for every business.” - Correct, it is not right for businesses that have already been closed because they refused to change. Seriously, of course continuous improvement is not only right, but necessary for any business to stay in business.
2. “Continuous Improvement should be reserved for true experts in that field, not for those trained in other business areas and certainly not for hourly employees” - False! Every employee in your company needs to evolve until they come to work every day studying their processes they use like a science and continuously and forever collaboratively improving those processes. Your true SMEs first job is to teach what they know, their second is to apply what they know. One of the most common mistakes we see at even fortune 50 companies is to hire experts to solve problems. The only result will be to solve problems at the same rate new ones are created. Transferring their knowledge throughout the organization will create an army of continuous improvement experts which must be the only long term goal of an organization if they want true success year after year.
3. “It is ok if everyone is involved in continuous improvement as long as all ideas are forwarded up the chain to senior management to determine whether the change is acceptable” - False! Senior leaders should drive a culture of continuous improvement including the training, coaching, mentoring, and resources required to provide employees the ability to learn the proper way to drive change. Once your organization is at this level, thinking a cross functional group of experts in both improvement and process should take time to push ideas up to senior leaders who are not process experts makes no sense. Let autonomy and self direction evolve and that will result in less control over process change, not more. Some elite organizations implement over 60,000 improvements per facility per year. Imagine trying to present that many ideas to senior leaders for authorization! Impossible, unnecessary, and counterproductive.

So we have addressed some common myths and determined that all employees ultimately need to be trained and have potential to be highly capable to master continuous improvement tools and collaborative change techniques allowing them to autonomously drive change using a structured daily huddle processes and a localized scoreboard to allow PDCA to occur, so now let’s look at a structured way to make this a reality.

1. Have a strategic Plan

Most organizations fail before they get started because their annual strategic planning is absent, late, poor, incomplete, not enforced, or a variety of other miscues we see all the time. The result of poor execution in this area is not disaster, it is simply the sealing of an organization’s fate to repeat past performance. There will be lots of activity by all departments changing lots of things critical to their annual reviews, raises, and bonuses but mysteriously the performance at the end of the year is statistically identical to every past year.  There are always all kinds of great excuses why marks were not met, but the reality is that they did a poor job of planning and executing a strategic plan at the level required. At a minimum a proper strategic plan should include the following.

• Start about 90 days before the end of your fiscal year end
• Include subject matter experts from all of your organization’s departments, ensure they commit the time required to the process.
• Have a true expert facilitate and provide them the authority to hold the team accountable for required action.
• Include accurate and comprehensive feedback from the four voices - Customer, Business, Process, Stakeholder.  It is critical to take all four into account during planning.
• S.W.O.T. analysis - an annual assessment of the Strengths, Weaknesses, Opportunities, and Threats associated with your organization is critical in the ever changing business environment that we live in.
• Catch Ball practice - Once a high level plan is in place, ensure you flow it down to every division, facility, department, and process. This allows every employee to have their leader interpret the mission, vision, goals, objectives (annual KPIs), strategies to be deployed, and key actions required to move the organization forward. All of the needs and ideas from this exercise flow back up allowing the senior leadership team to make final adjustments to the plan and creates alignment with every employee when properly done.
• Publish and promote the complete X-Matrix (see below) and KPI scoreboard. This makes your strategic plan visible to all and provides a KPI scoreboard to ensure your critical metrics are moving in the right direction as actions and strategies are being implemented.

      S.W.O.T. ANALYSIS

The S.W.O.T. analysis allow a cross-functional assessment of your organizations Strengths, Weaknesses, and external and internal opportunities and threats that exist so that they can be addressed in your strategic planning 

HOSHIN KANRI X-Matrix

Strategic Planning X-Matrix showing all key activities, owners, and KPIs

KPI DASHBOARD 

Proper KPIs show the performance of the organization from top level to process level in a normalized, visual, updated manner and located at the points of the processes they represent.

• Ensure the plan is a true living guidance document. If something major occurs as we all experienced in 2020, pull the plan out and revise as necessary ensuring to repeat all the original steps referenced above. Be relentless with ensuring the organization has the resources to both manage the daily business requirements and implement the actions and strategies. REMEMBER - proper and timely execution of the actions and strategies in the X-matrix historically achieve annual objectives confirmed by your KPIs allowing those major 3-5 year goals to be realized!  From day one, the tendency is to start chasing “shiny objects” and allocating some or all of the time reserved for deployment of the strategic plan to fire fighting mode!  The following will act as error-proofs to prevent this, but there is no substitute for strong aligned leadership.

2. Develop an impassioned case for your mission & vision. Ignite passion in your organization.  

Executives often hire Master Solutions, LLC to help them expedite the improvement of their organization. When we ask them what their biggest challenges are we often hear that their workforce is number one or close to that on the list. “Employees are lazy, lack enthusiasm, responsibility, ownership, and passion.” As I sit carefully listening to how underperforming employees are driving their organization into the ground I take deep breaths patiently waiting for time to respond, and in a professional well edited manner, explain they need to simply look in the mirror to see their actual root cause to underperformance.  

Employees are people, people are products of their environments and the sum of their output is consistent with the habits that they practice daily. Why are people chronically late? Why do people take advantage of long breaks?  Why don’t people maintain an organized work area?  Why do people treat others in a negative or demeaning way?  Why don’t people participate in improving the organization?  Why do people make mistakes or are too slow when completing work?  Why aren’t people simply robots exhibiting model behavior?  

Because people aren’t robots, they are people who need leadership, need an ear to listen too, need to be respected for what they know, need structure, need both accountability and recognition, need coaching, mentoring, training, and most importantly need to understand why it is so critical that they personally are there and the impact they have on a mission that they personally believe is so important.  All of the following are absent or at least greatly lacking in most organizations by the way.

So if you don’t have a perfect business then use this as an opportunity to hit the reset button. Get everyone together and make a passionate case about what your mission is, why it is so critical, how everyone needs to help move it forward, and that the leadership team is there to support everyone in their journey, not to look over there shoulder looking for any opportunity to assess blame.  Paint a clear picture of your Vision that will get everyone excited and once that audience has been captured, relentlessly pursue that vision through the X-matrix every day and never look back (unless you are seeing your KPIs leaving your past in the dust, then celebrate accordingly).

• Have an All Employee Meeting to review the strategic plan (very high level, remember the Catch Ball process has allowed everyone to already take in and have a voice in the plan)
• Paint an impassioned vision of what your organization will look like when the mission has been accomplished (this should truly move people and hit their heart strings)
• Show your top level KPIs, explain where you need to be, why, and where the best in industry are. (you want to make people motivated to chase down the pace car)
• Highlight employees that have historically been examples of what your expectations are (The closer to the direct process user level the better and ensure you have discussed their comfort level with this recognition ahead of time. If possible, have them speak to the team)
• Have SMEs explain any new systems that are going to be put into place and why (daily huddles, lean training, …) Everyone should have already heard this during the Catch Ball phase so this is a visual presentation to get people excited about the changes.
• Finally, enforce how critical it is to hit the milestones of the plan both in accuracy and timeliness. (this is your opportunity to remind people that the transition from a reactive culture to a continuous improvement culture will be hard at first, but if they find themselves not being able to manage both the present and the future, their leaders are there to support them and systems like daily huddles, gemba walks, senior leadership walks, KPIs and others are in place to quickly assess and provide support to those areas struggling with deployment)
• Finally, remind everyone that there will be roadblocks, things will go wrong. “Who do we blame when things go wrong? - Processes! Not poeple!”  Emphasize there will be accountability for everyone, especially leadership, there must be, but we focus on the process that caused the problem to occur and improve that process. Take the fear out of change!

3. Develop a comprehensive scoreboard 

One of the first questions we ask executive teams is simple. “Do your employees all have a scoreboard?” A very simple question, during the Super Bowl at any time the players can see the most critical information. The scores, the quarter, time left, time on the play clock, time-outs remaining, down and distance.  

In business however, too many times the answer is usually “not really”.  Employees don’t have real time information in front of them regarding quality, cost, delivery, chronic problems, improvement activities, training, meetings, and other information critical to their past, current, and future performance. In these environments, performance usually moves up and down with common and special cause variation but over time the results are stagnant. In these environments employees are also typically relatively apathetic. They work, but the lack of consistent verbal and visual feedback regarding their performance creates someone that comes and goes with the two main motivators, to keep their job and get paid.

• Ensure each scorecard is visible to your employees as close to their work as possible.
• Only put on the scoreboard what needs to be reviewed and acted upon. There are thousands of variables that need to be recorded and stored for future review, problem solving, improvement, and regulatory requirements but only the critical few attached to the strategic plan and relevant to that process should be on the process specific scoreboards.
• Ensure the KPIs on the scoreboards are updated at a frequency that best suites review and action. A golf ball manufacturer making thousands of balls per hour may need real time actual versus plan production displays allowing for slow downs, stoppages, or quality issues to be immediately identified and responded to. Other metrics may be better suited for hourly, daily, or weekly updates. Assess the frequency optimization carefully and adjust accordingly.
• Make sure the metrics are normalized or clearly show what is good and what is bad. If I show that we have produced 182 scrap pieces for the day that may sound bad and trigger an urgent response, but if historical scrap levels produce 892 scrap pieces per day, 182 may be the best day of the year so use X-bar and R charts for data lending itself to traditional Statistical Process Control or normalized charts adjusting data to a 1-10 scale.
• Never take special cause action to common cause variation. Teach some basic statistics and probability theory to the employees, just because hourly or daily numbers dip doesn’t mean any action needs to be taken. Understanding normal variation often measured as CpK or CP allows us to disseminate normal dips and rises from statistically valid dips and rises.
• Keep it simple! They are called “dashboards” for a reason. The term stems from improvement systems in the automotive sector when we think about the vehicle we drive. What information is most critical?  Speed, RPMs, Oil Temp, and so forth. A simple circular and labeled dial often does the trick showing where we are at, compared to optimal levels. Let the team participate to pick the best KPIs, frequency, and ways to display. Build in ownership from the beginning.

The best metrics are visual, easy to interpret, have an appropriate update frequency, are accurate, and reflect daily actual versus plan performance, long term performance, Pareto of issues driving performance, and actions underway to improve performance.

4. Start with a daily huddle to quickly assess, build consensus, and act upon the needs of the group.

How do your employees start their day?  Is there a set time they are required to start?  Do they simply slide into their designated spot and start where they left off the day before?  In most cases, the answer to this is “yes” with a lot more accountability for time and focus on hourly employees and value aded salary employees than there are on the rest.  The term “huddle” comes from athletics.  Before each play each member of the team participating on the next play gets in a circle as the leader communicates the play.  This serves two main functions, it ensures everyone is on the same page and creates a sense of teamwork and accountability with each individual to maximize results.

Whether you are restaurant, bank, manufacturer, hospital, postal worker or part of any other organization with multiple employees that are working to provide a product and/or service to customers it is critical to establish a daily huddle process.

• The huddle includes all that participate in the process or department along with any critical support staff that routinely are counted on throughout the day to respond to a variety of needs to keep things moving. An assembly line in the HVAC production industry may have 20 people on the line, a supervisor, and a representative from the internal supplier, internal downstream customer, quality, maintenance, and engineering involved.
• No one should be more than a few feet away from the speaker to ensure everyone can hear and participate. The meeting should take place at their scoreboard. If the environment is loud, head sets or a meeting room may be required.
• Everyone should be involved in the huddle. As improvement becomes more and more common, then those closest to the process, problem solving, and improvement of the process will begin to take over ownership from the supervisor as they learn.
• Most huddles should take 5-10 minutes at most. What is the goal? Is there anything we need to achieve the goal? Did anything happen the day or shift before that we need to be aware of? Are there any trainings, meetings, or visits we need to be aware of? Brief safety, quality, or leadership topics to review? As soon as the huddle breaks, the work starts and the team uses any real time KPIs to appropriately respond to roadblocks throughout the day. They also log any ideas and problems that occurred which will be used to populate the scoreboard and develop actions for future changes when appropriate using simple visual tools like Pareto charts.
• End of shift huddles are similar, this is time for actual versus plan performance. Did we accomplish what we expected at the beginning of the day? If not, why? We don’t try to solve every problem, we react to any critical issues and log the rest allowing tools like a Pareto analysis to drive structured projects for improvement or A3 style problem solving. Before everyone leaves all should feel good about their accomplishments and not frustrated with the barriers because they can see that future events will resolve them beginning with those most destructive to daily performance using data and their scoreboard as the guide.
• Every day, everywhere, using standard formats, employees Plan, Do, Check, and Act! Done properly, it is impossible not to look at the KPIs weekly, monthly, quarterly, annually, and not see consistent trends toward the annual objectives.
• A scoreboard should also exist for each department where all process scoreboards roll up to one department board for All-Employee weekly or monthly meetings. A scoreboard should exist for the entire facility where all department performance rolls up to one facility board for employee monthly meetings and executive daily reviews prior to their process walks. For a corporation all facility performance should roll up and so forth.

Scoreboards should be simple, visual, normalized and include just those KPIs that the process team is responsible for reviewing and acting on. Other information can include improvement actions, problem solving progress, training calendars and other information absolutely critical to that team.

5. Teach your employees how to study and improve processes using Pull System theory.

Performance doesn’t just improve on its own. New strategies must be deployed or adjusted in order for permanent improvement to be achieved. This means your employees need to know things that they didn’t previously know. 5S, Value Stream Management, Collaborative Problem Solving, Communication Skills, ISO systems, new ERP tools. The list is almost endless but traditionally an organization can manage about three major strategic changes so during the strategic planning phase it is critical to use tools like 4-square forced ranking methods to identify the most crucial for priority deployment.  

In short, don’t train everyone in your company in lean manufacturing techniques if they are not going to deploy many of those techniques for 6-12 months. The knowledge will not be retained. Think of Just in Time theory of providing someone with what they need, in the quality they need it, in the quantity they need it, only when they need it. One of the outputs of the daily huddle program is going to be training needs. If the team feels the next big opportunity is 5S and Visual Management deployment, quickly react and provide them with that training, ideally where the process is going to be deployed.

The result will be less training, lower costs, fewer hours away from daily roles and responsibilities, and a drastically larger return on investment from that training. Knowledge is not power! This is one of my least favorite regurgitated quotes. Knowledge is power ONLY when you have the time and authority to utilize and apply that knowledge. Ensure you have the best possible training library and TWI trainers and when a team asks for it, be prepared to quickly respond and deliver that knowledge. Ensure it is application based training which means employees learn and confirm understanding through application. 

Remember, people learn in three main ways, Visually, Audibly, and Actively. Some need to see the information, some need to hear the information, and some need to be physically active while the information is being presented. Ensure your training methods incorporate all three of these so that they can see how the training looks visually, hear all the elements of the training being presented, and are active by using lots of physical exercises allowing them to apply the training during and immediately following the training.

6. Use Leader Standard Work everywhere to bring standardization to leadership and traditional management roles.

How do your leaders act in the eyes of your employees? Do they see them all the time? Do they rarely ever see them? Are they controlling? Are they passive? Do they coach and mentor? Do they only talk to them when they have done something wrong? Do they interact with other departments? Do they work long hours? Do they stay in meetings most of the day? Are they always at their desk? Are they always with their employees and their team?  

Poor performance can almost always be traced back to one or several of the following. Lack of communication, lack of effective communication, lack of structured communication, lack of processes, lack of effective processes, lack of adherence to effective processes. All of these are the responsibility of leadership to put in place and we rarely see consistently effective leadership. So whose fault is it? Remember, we don’t blame people we blame processes. Most leaders were never taught how to lead, they were put into leadership positions because they were good at their last one. The Peter principle realized. We should’t promote people because they are great at their job, we should promote them because they have proven they will be good at their next one. Would you blame an assembly employee for making quality mistakes if we didn’t give them any instructions or training on how to assembly the part? We certainly shouldn’t! Then why should we blame poor leaders that weren’t afforded the same tools and training?

• Actions and strategies either already in your quality management system or in process of being deployed in your X-matrix need to be verified. Most organizes audit (usually too much) the product and/or services that are going to their customers but under-audit or don’t audit at all the processes that are producing those products and/or services. Remember the quote “you can’t inspect quality into your product, you have to build quality into your processes?” A truer statement has never been made and that applies to your leadership as well.
• One simple visual Leader Standard Work document on a clipboard, smartphone, tablet, or other with your leaders at all times. Did I hold my huddle? Did I tour my area every two hours? Did I look for 5S evidence, coach my team members, confirm Total Productive Maintenance activities, look for potential safety concerns? If I don’t have this document to keep me focused and accountable then emails, phone calls, emergencies, meetings, and distractions will consume my day and nothing I accomplished will do anything to improve the future of my KPIs and employees.
• Leaders at all levels need this including C-level employees and facility executive staffs. Department heads do their own Leader Standard Work walks to check each process Leader Standard Work for compliance and so forth. Layered auditing for leadership, beautiful in both simplicity and effectiveness when done properly.

Leaders Standard Work is similar to SOPs or Work Instruction. We would never ask employees to make a product or issue a purchase order without a standard procedure to follow yet almost no organization have a benchmark document for how to lead. Leader standard work ensures a customized instruction showing what all leaders need to do every day, week, and month to ensure these critical system we have reviewed are followed properly and that all employees get the best possible leadership experience ever day.

7. End every day with a team review and if applicable shift handoff

At the end of every shift or day, like the end of a football game, get everyone together and review the results. Celebrate the victories and recognize the defeats using the KPIs as your guide. Be frustrated with shortcomings but remind everyone it is a failure of our processes not our people and processes can always be improved. If we have multiple shifts, make sure the next shift is present to flow critical information down to. If machines can’t stop for huddles, have machine operators participating in the huddle have one on one meetings right after with machine operators to flow the information down verbally ensuring they are able to stay focused and safe. All team members need to be involved and it is up to the team to be creative to customize the huddle structure to properly suit the unique environment they work in. You know you are doing it right if all are focused, passionate, communicating the right way, participating, and playing a role in solving problems, improving processes, and identifying ways to make their team more successful.

8. Use R.A.C.I. fundamentals to manage and drive all change

I have had the opportunity to sit in thousands of meetings and just observe. Important and diverse topics are discussed and these are the most common responses. “I will do that.” “I don’t know, I will check on that.” “That has been completed.” “I will have an answer to that the next time we meet.” What is missing? Without a structured meeting system including a clear leader, scribe, and facilitator all of these commitments go undocumented and the next meeting sounds very familiar to the previous one.

A good project management infrastructure is critical as a component to good meeting facilitation. Using R.A.C.I. as an example, every actions should have a clear, documented, accountable associate that is Responsible for doing the work, Accountable for verifying the work, Consulted if a S.M.E. associated with the work is required, and Informed about why the work is being done and where/how it will be implemented for all that will be affected. Use the scoreboards to post the R.A.C.I. chart or other structure for project management and use the team huddles and gemba walks to provide auditing and accountability to ensure follow through in all cases.

R.A.C.I charts are one of many project management tools to clearly show who is responsible for, accountable for, should be consulted regarding, and should be informed regarding actions changing business processes.

9. Celebrate successes often

One fundamental of highly successful teams is celebration. Acknowledge accomplishments! Celebrate success! Hand out gift cards, pass out hats and t-shirts, cook burgers at lunch for your team! Employees don’t need more money when something goes well, they WANT acknowledgment and recognition when they are doing things right. There is nothing wrong with profit sharing, but when a VP comes to their huddle to shake their hand and tell them what an amazing job they did, they go home and talk about that with their family over dinner and store it away in their heart. It means more, it motivates them, it changes the way they approach their job every single day.

10. Reallocate time saved due to improvement to the right areas

We have clients say that they need to double their output so they can eliminate half their direct workforce. That is a quick conversation, we don’t work with them. Why would you develop your workforce so much that they improve their processes so much that they double their output so that they can endanger the jobs of themselves, friends, family, and peers. This is "business stupid". If you have improved so much that you only need half of your direct labor, reallocate half of your direct labor to more continuous improvement. Lowering your COGS will eventually lead to increased sales, until then, keep improving at a more rapid rate. If you use improvement as a vehicle to decrease your workforce, the remaining employees will respond accordingly and stop participating in continuous improvement!

11. Reward individuals with high improvement natural talents with increased responsibility.

After working with over 100,000 employees directly we have learned one thing that can not be disputed. Companies’ most talented are mainly in roles with the least influence. There is a fork truck driver that should be the COO, an assembly worker should be the GM, a warehouse picker should be the Director of Continuous Improvement. Employees right now, if we froze time, are in lower paying direct labor jobs mainly because of how they were raised and the opportunities afforded to them over the course of their life, not because of a lack of natural ability.  

As you deploy this continuous improvement engine the diamonds will begin to surface from the rough. Provide these employees with coaching, mentoring, increased responsibility, opportunities for higher education, and avenues for growth and they will grab it with more enthusiasm than anyone else in your organization. Show your employees their true potential and once they see it themselves they will become the hardest driving, most valuable, and most loyal advocates you could ever ask for.

12. Continuous Improvement can’t be a policy, it MUST be a philosophy.

Read every book worth reading on continuous improvement and it will essentially say the same thing. You have to take a holistic approach to continuous improvement. It must be all encompassing. Every person in every department must have the same philosophical approach to evaluating your processes, planning improvements, implementing improvements, studying the outcome of the improvements, and acting on that feedback loop. Plan Do Check Act, Plan Do Study Act, Define Measure Analyze Control, or any other modified version of the continuous improvement loop. If you don’t put the full heart and soul of your organization into a mindset that continuous improvement must become a way of life, then improvements from results will come and go as soon as the first unexpected crisis occurs.  

Communicate to your workforce that continuous improvement is going to be used in the best of times, the worst of times, and every time in between and walk the talk every second of every day and your business will change FOREVER to the point that if someone tries to take it away the employees will personally escort them off the property because after all, they have been through the journey or heard the stories of it and they never want to work for an organization that doesn’t embrace that culture.