Last week, I did an interview with Joe Dager of Business 901 on the topic of the integration of Theory of Constraints with Lean and Six Sigma. We discuss how it all fits together and the biggest problem facing managers who want to implement a continuous improvement program.
At the heart of continuous improvement is the matter of change. In order to improve the process, we must change it. However, not every change results in an improvement. We would not bother to make a change if it didn’t result in something positive, yet many changes we make result in little real improvement. Why is there is there such a mismatch between our expectations for change and the results?
In 2007, the Lean Enterprise Institute surveyed Lean practitioners about the biggest obstacles to their Lean Implementations. Most practitioners cite “resistance to change” as the biggest obstacle; from every level of management, the middle, front line, and employees as well.
Note that unrealized financial value ranks very low in obstacles, indicating the practitioners do not connect the lack of bottom line results to organizational resistance. Rather, they seem to be focused on implementation “maturity”, which is another way of saying that the organization is using all the tools. These results indicate that there is a disconnect between the goals of lean practitioners and management; emphasizing tool adoption over results achievement.
Why is everyone resisting the change? Why wouldn’t the organization want to use these tools? Certainly the lack of results is part of the problem, but it doesn’t explain the seemingly universal resistance. To find the answer, we looked at a management fad from the past, Total Quality Management (TQM).
Malcolm Baldrige National Quality Award Research Results
To get insight into the reasons for CI success or failure, look at the Malcolm Baldrige Award, the award for business excellence in the United States. The award establishes benchmark practices and processses for business excellence, “To enhance the competitiveness, quality, and productivy of U.S. organizations for the benefit of all residents.”. It has been criticized as being irrelevant to organizational competitiveness because many of the early recipients of the award subsequently failed. In recent years this issue has been corrected and the award is focused more on the results the nominees achieve, with the tools adoption taking a secondary position.
Quite a bit of research has been done on the relevance of the Baldrige Award criteria. In the spring of 2000 a study was commissioned to answer the question, “Is there a causal link between the Baldrige Criteria and actual performance of firms?”
The research had several significant findings related to our discussion.
First, the most significant driver of system performance is not process, but leadership. Leadership pervades everything the organization does, but those organizations that score well in leadership, score well everywhere. This doesn’t mean that tools are not important, but they’re not as important as the core skill of leadership.
Process management is twice as important when predicting customer satisfaction as when predicting financial results. We can conclude that having good processes are important to customers, but there is not a straight line from process excellence to financial performance. So you might have happy customers, but unhappy stockholders.
The lesson for management and continuous improvement program directors is that the soft skills of leadership are very important to delivering results and that the program, to be financially successful must have strong leadership from the real leaders of the organization. The real leaders must be commissioning, guiding, and delivering real accountability to CI teams. CI and business excellence initiatives cannot be delegated to the “business excellence department”. Leadership must be fully engaged in continuous improvement.
Continuous Improvement and Business Excellence is not something to be added to the work of managers, it is the work of managers.
An Empirical Investigation of the Malcolm Baldrige National Quality Award Causal Model
Darryl D. Wilson, Sam M. Walton College of Business Administration, University of Arkansas
David A. Collier, The Ohio State University
Here’s a short clip from my presentation last month.
Many organizations struggle with their continuous improvement (CI) efforts; achieving real bottom line results, whether in cost savings or increased revenues, has proven to be difficult. In spite of the widespread implementation of Lean and Six Sigma principles, poor results persist.
The TLS process generates 15-20 times better performance than Lean or Six Sigma. This presentation will show the root causes of poor CI program performance and a systematic framework to create ongoing bottom line results.
You can view the entire presentation by registering here