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Continuous Improvement Development Guide

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Continuous Improvement Development Guide (TM)

VOLUME VII: World Class Performance

Basic Volume Information

Some elite companies pass from a strong continuous improvement culture to one that drives world class performance. These top tier companies continually stay ahead of the competition, and regularly make game-changing breakthroughs.

This final phase of the continuous improvement model is an extremely interesting one. It does not have a lot of supporting sections, as there are not many specific things that separate a good or great company from a world class one. That just means that you can’t just add new ingredients like A3 reports to the mix and become world class. Rather, world class companies come into being because to their ability to do all the little things extremely well.

What this means, in simpler terms, is that this phase is more about doing all the things you have learned better than it is about learning new things. It is relatively easy to distinguish where someone is on their journey by what they are doing in their organization. If there are red tags and kanban cards in use, you can see a measure of progress that means they have at least started ramping up. A3 reports generally mean the company is well along its Lean journey and is focusing on keeping momentum. On the other hand, once a company enters the momentum phase, you can’t simply do a walk through and inventory the tools that are in use to tell if a company is world class.

Instead, you have to look at performance. Do the financial numbers tell the story of an elite company? Now, there can be some debate about whether profit is the only indicator of a successful company. But to be clear, companies cannot exist if they are not profitable. The owners may have a social agenda and want to share the wealth the company creates, but a more financially sound company has more options to fulfill that desire. But there is more to it than just squeezing dollars out of people. How a company earns is important, morally. But it also matters from the profitability standpoint too. Respecting employees, and customers for that matter, is not just the right thing to do. It is also the profitable thing to do. Taking advantage of either group may be of benefit in the short term. But in the end, adversarial relationships with either group are incompatible with long-term success. And world class companies are built to last.

Beyond the financials, though, world class companies build a stellar reputation. Is filling open positions tough because there are too many good candidates to choose from? Is the company emulated by others? Are news stories covering the company’s accomplishments commonplace? Are there case studies about it? If you answered yes to these questions, you may be a world class company.

Obviously, getting to this point takes hard work. It takes commitment. It takes discipline. But the benefits are substantial. Toyota’s reputation for world class quality bolsters its sales. Google’s reputation for how it treats its employees has applicants lining up to work there. That means low turnover costs and a virtual guarantee that they will have the perfect person for a job applying for it. A reputation for world class performance is not only the result of having an edge over the competition. It is also yet another advantage over them.

 

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Detailed Volume Information

Purpose

The purpose of this volume is less about giving you the tools to become world class than it is to encourage you to take the steps to become world class. In the earlier phases, the tools are somewhat independent of industry and situation. There is a need to adjust the tools, but, for example, every company can benefit from more effective communication. All companies do better when their equipment works properly.

The leap from outstanding to world class performance, though, is much more specific to your situation. There is no typical path to take. Our intent is simply to help you learn to find the right path for your company.

Boundaries

The boundary between phase 4, Keeping Momentum, and phase 5, World Class Performance, is not easily identifiable and even less easily crossed. That’s a big reason why there are so few companies that fall into this category. To add to the problem, world class performance is, to a large degree, externally defined. Today’s world class can be tomorrow’s defunct if the world passes you by.

For the purposes of this practical guide, though, the boundary is that you’ll know you are world class when you are told you are by the world. The advent of social media makes it a simple task to see how you are perceived in the world. If the world tells you are great, and backs it up with fierce loyalty to your products and services, and you’ve got great financial numbers, and your completion emulates you as they play catch-up, you’ll know you’ve crossed the boundary.

Timeline

Not earlier than 10+ years, if achieved at all.

Becoming world class is not a matter of simply flipping a switch. There is a lot of work and a great deal of learning that goes into it. There is also the not insignificant issue of the composition of the team. When companies start on their continuous improvement journey, most do not have the right people on the team to make it world class. The people at all levels of the organization were hired with an entirely different skillset in mind.

Many of these people are great individuals and adapt well to the new culture, but they are not built for the new culture. What that means is that some people are energized from working in the environment that we’ve been showing you how to build. Other people, though, can do well in it, but it they must put energy into it. World class companies need more of the former. But the people in the latter group do everything you ask of them. In fact, even senior managers can fall into this latter group. Not only would it be unfair to terminate them, it would be harmful to the culture. People want to feel safe and if you release high performing individuals, others will become disengaged. They will feel at risk.

Over time, though, the composition of the team will change. Some people will slowly shift to the energized group. Some of the people in the other group will retire. Your hiring and promotion plan will favor the people with the right skills and the right demeanor. Eventually, the makeup of the company will change to one that is compatible with world class performance. Unfortunately, the right way to do this takes time.

Key Principles

  • Expect to Win. Confidence is a key principle for world class companies. They don’t concede victory to other dominant players in the market. Granted, there is a fine line between confidence and overconfidence, but in world class companies, the line is often much further off in the distance. They take on challenges knowing that their systems will get them there, even if they don’t know the path yet.
  • Think Big. World class companies take on projects that change the world. That’s not to say they engage in fantasy projects. But their confidence lets them take on game-changing projects that others would not even attempt. Progress in the world is a mixture of evolutionary change and revolutionary leaps forward. World class companies are well positioned to exhibit the grand thinking that changes the world. 

Risk

Extreme.

Becoming among the top performers in the world in any field is extremely demanding. It can be just as demanding to stay there for long. Once an organization is recognized as being world class, it bears a significant risk. Granted, you don’t join the ranks of the elite without being great at your core practices, but there are two main things that can knock an organization down from its perch.

The first and most obvious is the fact that the world is a rapidly changing place. Toyota has been renowned for its reputation atop the car manufacturing industry. The truth, though, is that that competition is closing the gap, or, in many cases, has already surpassed Toyota in quality and profit. But even that risk pales in comparison to the changing nature of the industry. Electric cars are on the rise. In the coming decades, there will likely be a shuffling of the pecking order. World class performance does not always translate when there is a major shift in the industry.

The second challenge that a company faces is an internal misstep. Perhaps they gamble on a major new product that flops. Social media can amplify the impact of an issue, especially when it smacks of arrogance. Reputation is a major component of world class performance. If you do great, but nobody knows it, you don’t reap the self-sustaining benefits. Great employees leave and candidates apply elsewhere. Sales take a hit. Some of what makes companies world class takes resources, and anything that threatens that can knock an elite company to the ranks of the merely great.

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