While it’s easy to explain on paper, and that has been done so countlessly, continuous improvement is more complex to successfully execute. It concerns everyone and the business value is tremendous. Yet, it can be hard to develop a toolset that fits your current organizational structure to achieve the desired objective of this practice, which is business transformation.
In this article we break down this concept in more detail and reflect on the often overlooked need for employee engagement. Read on to learn about one of our global customer’s concrete results in reduced processing and skill transfer time.
What is Continuous Improvement?
Continuous improvement (or CI in short) refers to an ongoing effort to make things better. On an organizational level this translates to improving (existing) products, services as well as internal and external processes.
It can be considered a methodology, as companies actively decide on applying the principles to their operations to identify opportunities within the organization. There are three key elements to continuous improvement:
- Performance transparency: share measurable goals openly to emphasize opportunities and bottlenecks and track progress.
- Knowledge sharing: enable scalability of best practices across departments and verticals.
- Employee involvement: engage the people that are closest to your processes, customers and products to identify and implement true improvement opportunities.
While CI can be viewed as its own isolated concept, it often fits in a larger framework of Lean or Agile working methods that organizations adopted in the last decades. They work complementary and one doesn’t rule out the other.
Continuous vs. Continual Improvement
There is an important distinction between continuous and continual improvement. These two seemingly similar concept are actually different from each other. Continual improvement refers to an uninterrupted process and the concept was claimed by those in charge of the ISO 9000 quality management systems development. Continuous improvement means taking intentional actions on a daily basis to become more productive. While continuous improvement is always continual, continual improvement is not always continuous.
Continuous Improvement and innovation
While a distinction can be made between CI and innovation, the two concept are strongly linked together. Companies adopt both practices to facilitate sustainable growth and maintain a competitive edge in the market. Generally speaking, CI concerns existing products, services and products whilst innovation focuses on creating new versions of these things. The former pursues total quality management through set processes with the helps of tools like Kanban boards, the latter breaks boundaries to invent the next best thing. Historically, some have argued that the two can’t co-exist in the same organization.
However, many successful companies have now realized that CI and innovation empower each other. A continuous improvement culture creates a level playing field in which all employees have a voice. This opens up the possibility of collective intelligence as a valuable source for ideas and solutions. The improvement model further brings forward ideas to improve, which could become opportunities for innovation. As such, CI enables innovation, in particular incremental innovation, within the same organization.
Importance of Continuous Improvement
The bigger picture for enterprise continuous improvement is successful business transformation. Increasing competition across industries demands companies accelerate development, reduce costs and increase efficiency. If you’re average, you’ll soon be done.
CI takes shape in big and small ways. It might be a complete overhaul of a logistical process, daily effort to reduce waste, slight adjustment to the onboarding program for new hires or simplification of online payment processes. This is why the employee involvement and continuous improvement mindset are so vital. Only collective intelligence and effort can get you close enough to the action that true problems or opportunities for improvement are identified and solutions implemented.
What are the benefits of Continuous Improvement?
Business transformation on its own is far from tangible when it comes to day-to-day operations. With that said, the structured approach to problem-solving and performance improvement will certainly yield measurable value and benefits. Those that adopt continuous improvement successfully will benefit from:
- a structured approach to problem-solving and performance improvement;
- more efficiency and productivity
- reduced costs, time and overall resources
- increased employee engagement
- improved knowledge sharing and company culture
- the ability to adapt to the market
- higher customer satisfaction
The ROI of Continuous Improvement
Measuring the Return on Investment of all your CI efforts can be difficult thanks to its continuous, broad and sometimes ambiguous nature. Yes, employee satisfaction, cost reduction and ROI of optimized logistical processes can be calculated. But CI also intends to inspire a change in mindset across departments, leading to individuals taking action whenever they observe where improvements can be made. Their ideas might not be on the radar of those aiming to measure ROI. When implemented successfully and part of your culture, sustainable improvement happens daily and touches every process. It becomes a never-ending cycle that you can’t translate to a number.
However, you can isolate different CI initiatives and, when done with the right partner, gain an understanding of the added value that’s generated. For example, Agorize offers organizations various solutions that contribute to their overall CI strategy. Enterprise companies have adopted our internal idea management solution and innovation management software. These are direct contributors to their continuous improvement strategy. Through our software, they monitor clear KPIs with real-time performance dashboards.
Continuous Improvement processes
CI processes are efforts to improve products, services and processes through a defined system, repeated over and over again. It’s through repetition, the cyclical nature of the CI process, that incremental improvement can take place. Companies that adopt this method are better able to iterate and stay agile. As a result, rather than getting stuck in what is, those organizations continuously move forward and keep up with the market.
There are a number of processes commonly used for CI today.
- Plan-Do-Check-Act (PDCA)
- Six Sigma
Kaizen Continuous Improvement
Originally called Kaizen and now referred to as continuous improvement, is a Japanese philosophy that stresses the importance of keeping processes and systems flexible and open to change. It’s a way of improving an organization by constantly identifying and addressing problems, no matter how small. By consistently making minor improvements, organizations can create a culture that embraces change and encourages employees to look for new ways to improve. The methodology’s steps are:
- Get employees involved
- Find problems
- Create a solutions
- Test the solutions
- Analyze the results and determine whether to scale
Plan-Do-Check-Act (PDCA) – Deming cycle
PDCA or the Deming cycle is a shortened version of the method defined in Kaizen. It was developed by American engineer William Edwards Deming and its original goal was to manage quality control. The logic behind the approach is pretty straightforward. The Deming cycle, or PDCA cycle, consists of Plan, Do, Check, Act. It’s argued that PDCA is not the most suitable for urgent problems and the method requires large parts of your teams to be on board to function.
The aim of the Six Sigma process is to reduce errors so business capabilities can be improved. While developed in the 80’s, this continuous improvement model has evolved over time. PDCA can be used to implement the initiatives generated by Six Sigma and it is a model that focuses on 5 key principles.
- Work for the customer
- Identify root problems using data
- Stay proactive
- Use training and communication to keep team members involved
- Be responsive and flexible
The Kanban method helps teams and organizations visualize, measure and emphasize what they need to focus on to achieve continuous improvement. It is one of the improvement tools that is widely, sometimes even unknowingly, adopted across organizations. Kanban is usually executed through boards that illustrate a workflow or roadmap with the status of each task and existing process. Ideas for improvement and improvement activities won’t lead to positive change unless (digital) tools like Kanban are used to align the stakeholders of the improvement program.
The four processes mentioned are just a selection of lean improvement methods that people often use as it makes it easier to structure the process steps and implement them in the entire organization. Different methods emphasize different parts of the work process. From identifying opportunities to the continuity of execution that is key to a culture of improvement. While Kaizen is the foundation of the process called continuous improvement, PDCA are what people often know as the Deming circle is both a simplified version of Kaizen and excellent step in a process of Six Sigma. They all have one thing in common and that is approaching change in small steps with a plan of action that involves everyone in the company.
Continuous Improvement Case Study: 50% improved processing time and 3x faster skills transfer
Agorize client Majorel is an excellent example of how organizations with a deeply rooted need for and culture of CI still manage to accelerate and improve their efforts with the right continuous improvement tools. Majorel is the industry leader in business process outsourcing, operates on behalf of the largest international brands. To continue delivering services that meet increasingly high client expectations, they sought out a proactive innovation partner to improve their business processes. The key to Majorel’s continuous improvement efforts is the consideration of proposals from customer-facing contact center agents. Majorel then evaluates these recommendations and deploys those selected as quickly as possible.
Having clear milestones for the ideation process allows for improved solution implementation and results and ROI measurement:
- Employees propose their ideas.
- Each idea is visible to all employees who can support them through different channels on the platform (appreciation votes, virtual cash investments, team building, etc.).
- As the ideas are submitted, evaluations are carried out by Majorel’s subject matter experts.
- The best ideas are presented to different stakeholders involved for further study, a possible pilot or implementation.
The ROI of Majorel’s innovation program with Agorize materialized soon after the implementation of the first ideas and keeps increasing. They’ve seen a 50% improvement in processing time and 3x faster skills transfer. It has delivered a high-quality improvement to key business processes. Additionally, the use of the Agorize platform assisted Majorel in solidifying its commitment to innovation. Agorize is not only a tool for identifying ideas, but also for recognizing the best talent and increasing engagement. Therefore, also increasing employee retention.
Why Continuous Improvement fails without employee engagement (and how to fix it)
Talk about tools, processes and frameworks turns the conversation of CI into a somewhat mechanical process to achieve better business outcomes. While those too are essential to succeed, it’s crucial that leaders simultaneously take proactive action to emphasize the employee engagement element of CI and businesses at large. People are often aware of the need for employee engagement, but might fail to successfully adopt it in their CI strategy. In reality, employee engagement can be easily accelerated and optimized with the right awareness and tools.
CI is both a top-down and bottom-up system. Executive and management teams are required to support the continuous improvement program, often done through the previously mentioned processes. Yet the actual improvement develops on the employee level. Indeed, they know where improvements are most likely to be needed. However, that’s based on the assumption that they are engaged in the CI process in the first place.
As such, when developing the CI strategy, make sure to build in an employee engagement solution. Build a platform, or find a partner like Agorize, that allows you to unite teams around shared objectives. Then, to further engage them it’s important to add elements of conversation, gamification and recognition. Over time, the culture of continuous improvement will solidify and collective intelligence becomes a lever for transformation. If done in a structured manner, such a culture will translate into concrete and innovative ideas that enable quality improvements.
In order to continuously improve, it’s key to understand the concept of continuous improvement, types of process improvement models and improvement techniques. A continuous flow of opportunities to reduce costs, waste and errors and optimize the customer experience are essential for companies to transform and stay ahead of the competition. To enable this continuous delivery and make incremental steps of change, the right process and tools must be adopted and employee engagement must be fostered.
The essential elements to guarantee success are engaging people, structuring progress and measuring outcomes. And today, most organizations are capable of creating the CI strategy and engaging their teams to a certain extent. Yet, as the market becomes increasingly competitive, they must accelerate and scale their CI capabilities. To learn more about this, we invite you to book a meeting with one of our idea and innovation management experts.